Last updated: March 20th, 2023
Reviewed by
Grant Desselle
Licensed Insurance Agent
Table of Contents
Marriage and divorce are both common experiences. In Western cultures, roughly 90 percent of people get married before they turn 50 years old. According to the American Psychological Association, healthy marriages are good for physical and mental well being. They are also good for children. Growing up in a happy home protects children from a variety of developmental problems. However, about 40 to 50 percent of married couples in the United States get a divorce and the divorce rate for second or third marriages is even higher.
Even a peaceful divorce can be economically devastating when factoring in the costs. You need to maintain separate living quarters, there could be a loss of income, there are likely going to be credit and debt issues, and counseling might be necessary if there are children involved and that’s the upside. An angry divorce could include all of the aforementioned plus leave you with a stack of costly legal bills.
Most married couples carry a life insurance policy to provide for their spouse and children should they die, but that need doesn’t simply disappear once the marriage has ended.
Typically, the primary breadwinner in the family will purchase life insurance and list their spouse and children (if they have any) as beneficiaries on the policy. The spouse who is financially dependent on the other will then receive the death benefit on that policy when the spouse dies. The insured, on the other hand, have the peace of mind of knowing their family will be taken care of financially when they are gone.
The need for life insurance changes somewhat when you are getting a divorce. In most cases, part of the divorce settlement process lies is granting alimony and child support to the spouse who depends on the other one financially. Alimony payments are designed to help the dependent spouse maintain the lifestyle they have been accustomed to, while child support is set up to help cover child care costs and any other expenses that are associated with being a full-time parent.
If the primary wage earner paying the alimony or child support were to die, the dependent spouse could have a devastating financial burden if their ex-partner didn’t have any life insurance. This is how court-ordered life insurance policies to cover spousal support come about.
It’s understandable why someone would not want to carry a life insurance policy if they were involved in a bitter divorce. They feel like their ex-spouse will be benefiting from their death and if someone is already upset about paying alimony, their mood isn’t going to improve if they are ordered to purchase and maintain a life insurance policy with their ex as the beneficiary.
In divorces that include provisions for alimony or child support, it is common practice to include a stipulation that the supporting spouse should, in fact, carry a life insurance policy with their ex as the beneficiary. This can assure the children will be taken care of should the supporting parent die and it’s particularly important if you suffer from a past or present medical condition. Therefore the court orders you to carry divorce maintenance insurance for a specific period of time to make sure this commitment is met.
How long the policy is maintained depends on what it was intended for.
There are some situations when the court may order a life insurance requirement for alimony payments when there is a demonstrated need to protect the recipient.
Reasons most cited in divorce agreements for alimony protection:
The amount of coverage required in a court ordered life insurance policy would be related to the extent of the obligation, but the court must also consider the financial impact of paying insurance premiums.
Talk to a licensed independent life insurance agent about your divorce maintenance insurance. If the court has ordered you to purchase a life insurance policy, an independent agent is going to work with you to get the best policy for your particular situation at the best rate, no matter the time frame. Just let the agent know the desired policy is court ordered and the date it is expected to be active.
Ethos sells instant issue term life insurance policies online. You complete the full application online and receive an instant decision.
The application asks about your lifestyle and health to avoid requiring a medical exam. The company also uses public reports and algorithms to decide and set prices.
The Austin-based company launched in 2016 and now operates in all 50 states.
Product details:
Pros
Some of the other options are Haven, Bestow, Ladder, and Fabric.
We think Bestow has the best prices and percentage of approved applicants.
A good fit for Bestow is a person 30 – 45 years old with no current health problems. Some medical conditions that are ok as long as they are controlled are high blood pressure, cholesterol, anxiety, depression, and sleep apnea.
The actual cost of the policy is determined after the company approves you. The cost may be higher or lower than expected. It is a nice feature that you can tailor the policy to fit your needs without submitting additional information.
The simplified issue life insurance application takes 10 – 15 minutes, and you are done. You can apply in the middle of the night on your mobile phone and have coverage instantly.
Some people don’t want to talk to an agent and be overwhelmed with questions and options. With Bestow, it is your choice whether you talk to an agent.
Cons
If you have a history of cancer, heart attack, stroke, cancer, immune disease, or diabetes, you are better off applying elsewhere. These conditions cause automatic declines.
Many life insurance policies allow you to convert to a whole life insurance policy without health questions during the coverage period. Unfortunately, this is not an option for the Bestow product.
While the product is not available for those over 60, the closer you are to 60, the more difficult it is to get approved for a policy with Bestow. This is because of the increased risk to the insurance company, especially when issuing instant products.
Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
Grant's past experience includes work as a licensed sales agent for Hagerty Insurance. He has reviewed thousands of existing auto policies across the nation and issued hundreds of new ones on everything ranging from classic cars undergoing restoration to modern exotics and motorcycles.
