Is a Life Insurance Policy a Marital Asset?

A life insurance policy may count as a marital asset, depending on what law or laws control the policy. Whether or not it is a marital asset, an insurance policy will be subject to both federal and state insurance law as well as community property law.

Life insurance beneficiary rules for spouses and ex-spouses can be complex and confusing. If you are or think you should be named as a beneficiary on a life insurance policy owned by your spouse or ex spouse, call our experienced life insurance lawyers at 1-855-240-9160 for help getting your claim for death benefits paid. We have helped beneficiaries nationwide fight to get their payout, and we can help you too. Your initial consultation is free of charge, and we don’t get paid unless and until you do.

Whole Life Insurance is Almost Always Considered a Marital Asset

If your spouse paid premiums on a whole life insurance policy during your marriage, the value of that policy qualifies as considered a marital asset when you divorce and it is subject to the property settlement agreement.

Whole life insurance policies, unlike term life policies, accrue value as the insured pays premiums. It may then get cashed out and the proceeds divided according to a property settlement agreement. Alternatively, it can be left intact and the portion the non-insured spouse is entitled to get paid in some other way from the parties’ other marital assets.

How the court splits the proceeds from a whole life insurance policy will depend upon whether the marital assets are subject to equal or equitable distribution. This varies state-to-state.

When Term Life Insurance Death Benefits Are a Marital Asset 

Term life insurance policies do not accrue present value as premiums get paid. Rather, term life policies pay out only if and when the insured dies within the policy’s term. At that point, the death benefit pays to the named beneficiary.

State law provides the definition of “marital asset”, and it varies state-to-state. In community property states, life insurance qualifies as a marital asset if the premiums were paid with income earned during the course of the marriage. The nine community property states are:

  • Arizona
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Washington
  • Wisconsin

If you live in one of these states and your spouse or ex-spouse died, and you were not the named beneficiary, call us – you may have a claim to some or all of the death benefits. Beneficiary contests are not easy to win. You will need an experienced life insurance attorney by your side to fight for what you are due.

How Revocation-Upon-Divorce Statutes Affect Life Insurance Beneficiaries

About half of the states in our nation have so-called “revocation upon divorce” statutes that automatically remove an ex-spouse as a life insurance beneficiary when the divorce is final. If a divorced policyholder wishes their ex-spouse to remain as beneficiary or the court requires them to name their ex-spouse as beneficiary, they must follow their state law procedure for renaming them as beneficiary.

How ERISA Affects an Ex-Spouse Beneficiary

Federal ERISA law controls employer-provided group life insurance policies and overrides state law when they conflict. This means that in revocation-upon-divorce states, the named beneficiary will receive the death benefit even if they are the insured’s ex-spouse. 

How Life Insurance Secures Child Support or Spousal Support Payments

A revocation-upon-divorce statute affects an ex-spouse beneficiary in a number of scenarios. First, if the ex-spouse or the children of the marriage are support obligees and the insured was a support obligor, the insured may be under court order to maintain life insurance for the benefit of the support obligees should the insured die. In that case, the support obligees should contest the beneficiary designation.

If the insured was required to name you as their life insurance beneficiary but failed to do so, call us for help. We can help you get the payout you deserve.

Spouses and Ex-spouses – Call an Experienced Life Insurance Lawyer for Help if You Should Be a Life Insurance Beneficiary

What happens when the insured moves to a different state after getting divorced? What happens when the insured converted their employer-provided group life insurance policy to an individual policy, or if that conversion was ineffective through no fault of the insured? What happens when the insured changes an irrevocable beneficiary designation?

You may still get the death benefits. Our experienced life insurance lawyers have helped spouses and ex-spouses across the nation navigate the complex interplay of federal and state insurance and family law and get the death benefits they are due. Call us today at 1-215-940-8900 to discuss your case, free of charge.

Written By: Chad Boonswang
Chad G. Boonswang, Esquire is a litigation lawyer based in Philadelphia, PA. Selected as an ASLA 2014, 2015, 2016, 2017 and 2018 Top 100 Litigation Lawyer, Mr. Boonswang plays to win. As a lawyer, athlete, and scholar, he has always put in the energy, time, and commitment to be the best. After working for several prominent law firms in Philadelphia, including Montgomery McCracken Walker & Rhoads LLP, he founded his own practice in 2002.  Since then Chad has recovered tens of millions of dollars on behalf of his clients from life insurance claims and catastrophic injury cases.  Year after year, he has earned a 10.00 Superb rating on Avvo.

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