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Do You Need Court-Ordered Life Insurance?

June 20, 2023
Our goal is to educate and advise on life insurance options, so you can feel confident in making the right choice, whether that’s through Quotacy or somewhere else. To ensure we provide accurate and trustworthy information, our writers follow strict editorial standards.

In most situations, buying a life insurance policy is a voluntary decision you make to protect your loved ones financially.

However, there are some instances where the court may require you to buy a life insurance policy. This often occurs in cases involving alimony or child support orders.

In this guide, you’ll learn what court-ordered life insurance is, how it works, and how to get it.

What Is Court-Ordered Life Insurance?

During divorce settlements, buying a new life insurance policy or maintaining a current one may be a requirement. This is called court-ordered life insurance.

When might the court require life insurance?

  • Child support: In cases where child support is involved, court-ordered life insurance is often mandated to secure financial support for the children. It provides a safety net if the paying parent passes away before their child turns 18.
  • Alimony payments: When alimony (spousal support) is awarded, court-ordered life insurance may be required to guarantee ongoing financial support for the recipient. If the paying spouse dies, the life insurance policy ensures that the support payments continue.

Divorce agreement provisions will typically include the required amount of life insurance. How long the policy should last or be maintained depends on why it’s needed.

  • For child support, it’s typically required that an ex-spouse maintain life insurance until all children reach the age of maturity (18 or 21, depending on your state).
  • For alimony, coverage should last as long as alimony payments are required. Alimony laws vary by state.

Who Owns Court-Ordered Life Insurance?

The policyowner can be you, your ex-spouse, or a third party.

Ownership will be straightforward if you and your ex-spouse have a cooperative relationship. But this isn’t always the case. In contentious circumstances, a policy owner may stop paying premiums or change the beneficiary without notifying the ex-spouse, leaving them with no financial safety net.

A court may enforce the ex-spouse as an irrevocable beneficiary, meaning the life insurance policy cannot be changed without the beneficiary’s authorization.

Alternatively, you may opt for a third-party owner, such as a custodian or trust. This approach protects against unwelcome changes to the policy. However, it is important to know that maintaining a trust incurs additional costs.

Who Is the Beneficiary of Court-Ordered Life Insurance?

Life insurance provides financial protection to those who depend on you. Your beneficiary receives a death benefit check if you die while the policy is active.

Even if you’re getting divorced, you may still be financially responsible for others. So, who are these beneficiaries?

In alimony cases, the ex-spouse receiving alimony is typically the beneficiary.

The court may also designate the ex-spouse as the policyowner, while the ex-spouse who pays alimony becomes the insured and payor responsible for paying the premiums.

In child support cases, there are a few options:

  • The ex-spouse is often the beneficiary unless they can’t be trusted to use the proceeds appropriately.
  • A trusted friend or family member can be the beneficiary. This custodian is responsible for using the funds in the children’s best interest. The Uniform Transfers to Minors Act (UTMA) allows the custodian to manage the funds until the children reach the age of majority.
  • Another possibility is establishing a trust and naming it as the beneficiary. By doing so, a chosen trustee is responsible for managing the funds and utilizing them for the child’s needs until they reach the age of majority. The trust allows for specific instructions to be included, such as distributing the life insurance proceeds periodically rather than providing a lump sum to an 18-year-old. Also, naming a trust as the beneficiary allows the funds to bypass probate, ensuring immediate availability for the child without incurring additional court fees.

Why can’t my child be the beneficiary of my life insurance policy?

Naming a minor as the beneficiary comes with complications, such as:

  • If you die unexpectedly while your child is still a minor, the life insurance proceeds are subject to the court system.
  • A court-appointed legal guardian needs to manage and make decisions regarding the funds for your child. This process can involve additional time, expenses, and delay access to funds.

Does your life insurance plan call for more than one beneficiary? Naming multiple beneficiaries is a common practice you may want to consider. 

See what you’d pay for life insurance

Comparison shop prices on custom coverage amounts from the nation’s top carriers with Quotacy.

How to Get Court-Ordered Life Insurance

If you have been court-ordered to obtain life insurance, follow these steps:

  • Review policy requirements: Carefully review the court’s instructions regarding the type of coverage, coverage amount, policy duration, and any specific conditions or provisions that must be met.
  • Designate beneficiaries: In compliance with the court’s order, name the appropriate beneficiary or beneficiaries as specified. Follow the instructions provided by the court regarding beneficiary designations.
  • Consider the purchase timeline: The court will typically provide a deadline by which you must demonstrate proof of purchasing the required life insurance policy. Take note of this timeline and ensure you meet the deadline.

The timeline may be the most challenging part of obtaining court-ordered life insurance. Many don’t realize how long it can take to get life insurance. It’s crucial to start the process well in advance to allow for potential delays or complications.

If your court-ordered deadline is still a few months away:

Even if you have a while before your deadline, start the buying process months in advance. The application approval process from start to finish can sometimes take time.

We tell our customers to expect a 4-6 week timeline, but it may go faster or take longer for some. It all depends on the carrier you apply to, how soon you schedule your medical exam (if you need one), and how quickly your doctors send the underwriters your medical records (if they request them).

Start the process today. Get instant term life insurance quotes and compare policies and pricing online. When you’re ready, the online application only takes a few minutes.

Once submitted, you’re assigned an agent who goes to work for you, ensuring you get the best price possible. They’ll guide you through the process and keep you updated on the status of your policy.

If you need court-ordered coverage A.S.A.P:

Quotacy works with multiple life insurance companies to help provide you coverage. A few of the carriers we work with actually offer instant approval. If your deadline is quickly approaching, contact Quotacy directly.

When you call in to speak with an agent, explain that you’re short on time. Your agent can provide you with some options. Instant coverage is available to those who qualify.

Get Life Insurance to Protect Those You Love

Court requirements for life insurance have a set start and end date. When your obligation end date approaches, it doesn’t mean you must cancel the life insurance policy.

If the court-ordered life insurance was due to child support, you could still keep the policy active for the benefit of your children, even if they are legal adults. If the policy beneficiary is your ex-spouse, you’re free to change it.

If the court-ordered life insurance was due to alimony responsibilities, you could change the beneficiary once your obligation is over. You can even update the beneficiary to your new significant other if you have one. If you’re single, a friend or family member works, too.

Need to fulfill that court-ordered life insurance obligation? We can help. Start by getting life insurance quotes now.

Watch the Court-Ordered Life Insurance Video


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