By Erin Nielson and Caroline Vincent Basque
Often as a part of a divorce judgment/agreement or child support agreement/judgment one party is required to provide life insurance as security for their monetary obligation. We discussed the topic of life insurance in a blog post back in April .
Family law attorney Erin Nielson is joined this week by Don Ludwig an Insurance Agent with American National Insurance Company to discuss different life insurance options available to individuals who need to secure their child support or alimony orders with life insurance.
Some key takeaways from Don:
- Two basic types: whole life insurance versus term life insurance. Term insurance is temporary insurance policy where you have coverage for a certain period of time. Whole life/universal life insurance is a permanent product. It is not bought for a certain period of time.
- A term policy is usually used for short term needs. If you do not die within the term limit, you do not get paid on the policy. Once the term ends, there is no financial benefit.
- A permanent whole/universal life insurance policy is an asset. There is a cash accumulation value that is available to you as a living benefit. During your life you can tap into the policy to supplement your retirement or you can access the money for medical needs or long term care needs. The receipt of this money is tax free.
- Life insurance through work can be a nice benefit, but it does not create an asset that you can bring with you when switch employment or lose your job.
- The price of life insurance is tied to health/age. The sooner you can lock in life insurance, the lower your investment will be.
As family law attorneys, we love the idea of using a whole life/universal life policy to satisfy your obligation to maintain life insurance. As you pay the premium to satisfy a court order, you are also building an asset that you retain once your child support or alimony obligation is terminated.
If you have any questions regarding life insurance or want to learn more about your life insurance options, feel free to contact Don Ludwig here: https://www.ludwigagency.com/
If you have any questions regarding your obligation or your spouse/other parent's obligation to maintain life insurance please reach out to the experienced family law attorneys at Wilchins Cosentino & Novins LLP at 781-235-5500 or schedule a call here.