People often forget to sort out their life insurance when getting a divorce. Dealing with your life insurance policy is an important part of the divorce process - especially if there are children involved.

There are a few things you should consider before finalising your divorce.

Update your beneficiaries

A beneficiary is the person who will receive your life insurance payout when you pass away.

Most married people name their partner as the primary beneficiary on their life insurance policy. It is completely up to you whether you decide to either keep or remove your ex partner from your life insurance policy. If no children are involved, people often don’t see the point in keeping their ex-partner as a beneficiary. This is a personal decision.

Check whether you are allowed to change your primary beneficiary or not. Some policies let you change your beneficiary at any time. Others will not let you change your beneficiary once they have been designated.

Please talk to a financial expert if you’re not sure what to do in the best interest of yourself and your children.

Account for the cash value of your policy

Some types of life insurance build cash value. This is money that you can access while you’re alive. This life insurance cash value is considered an asset. Talk to your life insurance policy holder, or a financial expert, to find out whether your life insurance policy has a cash value portion - and how the cash value should be dealt with in the divorce.

Protect your child’s maintenance costs

If you are going to receive child support or maintenance payments after your divorce, then you should consider protecting this income. Child support is supposed to go towards looking after your children. If the parent paying the child support had to pass away, this income is lost.

Child support payments can be protected by taking out a life insurance policy that insures the life of the parent paying child support and names the children as the beneficiaries. This means that if the payer has to pass away, your children will receive money for their care.

The policy should be enough to cover what you would expect to receive in maintenance in the coming years, while taking inflation into account.

If there is no insurance policy in place, your children would have to claim from the deceased parent’s estate. This could take ages to pay-out. If the children are beneficiaries on the life insurance policy, they will get paid out a lot quicker.

A trained financial expert could help you set up a life insurance policy to protect your children’s future.

Check that your life insurance still meets your needs

Moving from a double income to a single income can be scary. You might have shared expenses like paying for the mortgage, looking after your children or paying for the electricity and water bill.

Depending on your personal circumstances, you might need more, less or the same amount of life insurance after divorce. Ask yourself things like:

• If something were to happen to you, would your insurance payout cover the bond?
• Do you have enough life insurance to protect your children’s lifestyle, education and future?

When getting a divorce, you may need to consider extra income protection as well. Income protection pays you a monthly amount if you are unable to work due to illness or disability.

Review your life insurance policy

Life insurance won’t be your top priority, I understand, but take a few moments to go through your policy and make sure it still meets your needs and protects the right people.

Divorce is hard enough. Let’s work together to create a plan that keeps any related financial stress to a minimum.