MANY married couples focus on life cover to protect their families in case of an unfortunate death.
However, divorce can make updating your life policy the last thing you want to deal with in the middle of an emotional turmoil.
Lee Bromfield, CEO of FNB Life, said everyone needs to deal with potential unpleasantness before they get married in case the marriage breaks up.
Changing beneficiaries: If you are no longer financially dependent on each other, you should review and update the policy. This makes sure that the correct beneficiaries are paid out should anything happen to the policy-holder.
Banking details: Individuals who are paying their policies from a joint account should contact their insurer and update their banking details, to avoid the policy lapsing if there are payment problems.
If your policy lapses, you will no longer be guaranteed the same premium on a new policy. Factors such as age and your current health conditions will increase premiums.
Similarly, if you were financially dependent on your partner, you can either take over the policy payments or discuss the way to continue contributing during your divorce settlement negotiations.
Financial needs of the children: When there are children involved, an agreement should be reached by both parties in order to protect them financially if one or both of you is no longer around.
The decision taken will be based on your individual circumstances as well as estate planning arrangements of one or both parties’ last wills.
Sum insured: Your financial situation may change after a divorce, making it necessary to adjust your life cover amount to cover any shortfall.
New policy: Individuals who did not have a policy of their own while they were married should consider taking out their own policy.
“Failure to review and update your life policy after a divorce may not only lead to family disputes and costly legal battles, but those who are dependent on you in financial distress,” said Bromfield.
