After divorcing couples agree on the terms of a divorce settlement agreement, which often include orders for child support and spousal maintenance, it is important to secure life insurance to cover support payments in the event of the payer’s death. The amount of insurance coverage requires thoughtful calculation; it is important to agree on a policy that is robust enough to cover what could be years of spousal or child support.
Life Insurance to Cover Child Support Payments
Child support and miscellaneous expenses parents pay until a child graduates high school can be substantial. Beyond court ordered child support, where life insurance may be calculated by multiplying the annual child support payment times the number of years until a child reaches adulthood, there will be other expenses related to raising a child. There may be child care expenses, unreimbursed medical bills, fees for participating in extracurricular activities, and even college tuition that life insurance must cover if the payer spouse cannot. An experienced attorney can provide the necessary information regarding life insurance to cover child support and spousal maintenance needs.
Because naming minor children as beneficiaries to the life insurance policy can create unwanted problems, parents may need to designate a trustee if the payer does not want to name the surviving parent as beneficiary. As children grow older, the amount of life insurance necessary to cover a payer’s obligation naturally decreases, therefore an agreement may include a provision that allows the insured to reduce the face value of the policy over time. Conversely, if the child’s support needs increase, perhaps due to a medical issue, the agreement will also have a provision to allow an increase in insurance coverage.
Life Insurance to Cover Spousal Maintenance Payments
As for spousal maintenance, life insurance is often calculated taking into account the amount and duration the payer is obligated to pay support. Rather than calculating support as the amount times the number of years ordered, advisors often recommend utilizing a present day value to avoid a situation where the recipient receives a windfall if the insured dies unexpectedly.
Sometimes, health insurance for someone ordered to pay child support or spousal maintenance may be prohibitive often depending on their health status and age. When negotiating a divorce settlement agreement that includes life insurance to cover support obligations, it cannot be unduly burdensome on one party. If life insurance is not a viable option, other security to cover support obligations may be necessary.
Contact an Experienced Divorce Lawyer for Help
If you are ordered to pay child support or spousal maintenance or you and your children are recipients of support as part of your divorce settlement, it is important to include a life insurance provision to secure the support in the event of the payer’s death. Life Insurance to secure child and spousal support payments will ensure the continuity of support. If you have questions regarding Illinois child support or spousal maintenance contact the family law office of Ronald L Bell & Associates P.C. for immediate assistance today.