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Court Ordered Life Insurance: A Simple (But Complete) Guide

court ordered life insurance
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When a divorce court orders that life insurance be purchased to finalize a divorce, it puts the purchaser (payor) in a position to scramble to find the best and cheapest deal.

During a divorce, a judge may order a decree requiring one ex spouse to purchase and pay for a life insurance policy that- for example – names the other ex spouse as a beneficiary.

This is generally a very unwelcome bill to have as it feels like someone that has been reduced from being a desired life long partner is now  legally benefiting from a former spouse in the event of his/her death. 

Consider this article to be quick start guide to getting this done the right way, and in one shot!

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How To Get Cheap Term Life Insurance

court ordered life insuranceBasically, the shorter the term the cheaper, and obviously the less amount insurance you need the cheaper it will be.

So, first we need to know how long the term is required to be, and how much insurance is required. The court will usually determine the term length and coverage amount.

There may be a deadline ordered for when the insurance must be obtained.. This time pressure in addition to financial pressure can be extremely frustrating!

Fear not!

The ideal scenario would be to ensure your access to many insurance companies.  This allows you to have the best shot of efficiently shopping around the market to put you in the position to secure the absolute cheapest possible rate!  

The question is how much time do you have to shop around? This will help determine the best course of action regarding whether or not you should take a physical exam.

Let’s break down the pros and cons of both. 

No Medical Check Term Life Insurance For Your Budget and Faster Approval

This is referring to what is called a paramedic exam. A licensed medical professional will coordinate a time and place with you to draw blood and take a urine sample from you.

Usually these samples are sent to a lab by overnight delivery to ensure efficient testing for consideration of your approval. 

court ordered life insuranceYou can skip this part of the process.

Applying for life insurance without going through getting a paramedical exam will certainly expedite the process of getting a policy to help finalize a divorce. The catch is the insurance can cost more. 

Should you consider how much time you have to secure a policy and the lowest price possible?  For example, we understand that you may have to make this payment at least 1200 times over 10 years!

The savings can be substantial enough to take a year off of work. 

Getting a physical doesn’t guarantee approval. However, it usually leads to a substantially lower monthly premium.

A reasonable worse case scenario is up to a 60 day wait from start to finish to officially secure the policy. 

Many divorce courts can be flexible in making sure there is enough time to obtain life insurance.

They understand that there may be difficulties due to preexisting conditions,  family history, or other factors that can slow the difficult process of  identifying an affordable option. 

The most time consuming part of the process is when the insurance company requires what’s called the attending physician statement. Generally, the agency you are getting help form in applying will be able to handle this part for you on your behalf. 

It is just out of everyone’s hands at this point because everyone involved is waiting on a medical administrator at your doctors office or affiliated hospital to eventually get to your request.

This may put you in the uncomfortable position of communicating with the court to explain that you may need more time because of a pending application. 

It helps to have an agency that has staff in place to handle this for you as they have relationships with vendors that can expedite the process. Situations like this are extremely time sensitive.

The (Real) Truth About Court Ordered Life Insurance To Cover Alimony

Payments like alimony and child support are basically insured against death.

What happens is income replacement – a basic and common use of life insurance – becomes a very important financial product for the beneficiary.

court ordered life insuranceTherefore, an annual income multiplied by the number of years required will yield the amount of insurance required to be purchased.

You may be aware that studies show that women tend to see a reduction in lifestyle that is 300% lower what the average reduction in lifestyle is for a man. Many gentleman will find that hard to believe in their personal experiences.

This is part of  the precedent that courts use in order to justify the need for life insurance to be purchased. 

Just as an example: in a divorce with an ex wife who has custody of two children ages 6 and 10, an ex husband may be ordered to get a life insurance policy for $1,000,000!

This would calculated by multiplying the husband’s $50,000 in annual income by the number of years until both children turn 18.  This would require a 15 year term policy since the 6 year child has 12 years until starting college. 

Here's What Really Matters After A Failure To Comply With Court Ordered Life Insurance

court ordered life insuranceThe court can impose substantial financial fines that will be ordered due within a short period of time. What if you lapse the payment due to non payment and you’re advanced in age?

It may be really expensive or even impossible to insure in this situation.

Well the court may order you to pay all remaining premiums as well as additional costs within 90 days!

Ex spouses who became the beneficiaries can be granted third party authorization when you apply. This allows them the leisure of checking if you’re making the payment anytime he/she wants to . 

What about if the beneficiary never finds out that policy lapsed until after you die?

If your agent appointed through your power of attorney is set up properly, you may be able to have the agent fix this lack of coverage for you on your behalf.

The problem is that when your court appointed beneficiary realizes that the death benefit never came through, he/she can petition the court to get your life insurance death benefit that you purchased to benefit someone else.

This would leave someone else like your new spouse that  you carefully planned care for with a lot less or even worse… with nothing. 

Would it be silly to get a rate low enough where its affordable to take care of your loved ones and finalize a divorce?

Conclusion

Even if you’re normally a do it yourself expert, would it be silly to avoid spending time on this by delegating it to a professional?

This situation can rile people up emotionally callused or even overall happy individuals to a point where stress becomes cancerous in different aspects of life.

Would it be a bad idea to take a step  towards the progress that you want by using the form on the right side of this page right now to get an instant quote?

About the author

Victor Vega has over a decade of experience in working with individuals regarding their personal finances after starting in 2007 at Merrill Lynch as a financial advisor. I started Garden Mutual in 2020 so that you could have access to a life insurance agent that puts your interests first! As an independent agent, I work with over 10 carriers. This means that my loyalty is to my customer and not any one particular insurance company . Let me provide you with objective information that you can use to pick the best life insurance policy for yourself today.  We are always looking to improve ourselves for your benefit!

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