In the majority of life insurance policies in North Carolina, a person’s spouse is the primary beneficiary. After all, life insurance protects your closest loved ones from financial ruin if your income is lost due to your death. When you name your spouse as your beneficiary, you guarantee that he or she can continue to pay for housing, food and to continue raising your children. This is particularly important for the person who makes the majority of the income.
During a divorce, most people do not want to keep their spouses on the life insurance policy. The question remains: should you leave an ex-spouse on the policy? Most insurance policies allow you to change the beneficiary at any time. This is true if the policy is revocable. Investopedia states that life insurance policies accrue cash value. Every month that you make a premium payment, it enters a fund that grows interest. The balance is a cash value that belongs to you.
You and your partner can elect to waive the death benefit. If you cash out the life insurance policy then it will be a portion of your net worth. Then, you can use the life insurance policy as a marital asset that you two can divide.
Custodial parents may also choose to take out a life insurance policy on their spouse. They may use this policy to cover child support or alimony if their partner passes before the last child turns 18 or before the alimony payments expire.
None of the above information should be regarded as legal advice. It is for educational purposes only.