Divorce is never easy. Between child custody battles, property division, and emotional fallout, one crucial detail is often overlooked the status of your life insurance policy. Whether accidental or intentional, failing to update your beneficiary after a divorce can lead to bitter disputes and unintended consequences that affect your new family, children, or estate.
If you’ve gone through a divorce or are currently in the process it’s essential to understand how life insurance policies are impacted and what steps you must take to protect your intended beneficiaries.
Can an Ex-Spouse Still Receive Life Insurance After Divorce?
Surprisingly, yes unless the policy is updated, your ex could still receive the full death benefit depending on your state. Most people name their spouse as the primary beneficiary when they buy life insurance during marriage. But many forget to change it after the relationship ends.
Here’s a common scenario:
A man divorces and remarries but never updates his life insurance. When he dies, the ex-wife gets the payout not the current wife or his children from the second marriage. This outcome is completely legal in some states unless specific action was taken.
When Courts Order Life Insurance in Divorce
In some divorces, a judge may require one spouse to keep the other as a beneficiary, especially if they share children. This is often done to ensure that child support or alimony obligations are met even after the insured’s death.
But problems arise when the policyholder violates the order changing the beneficiary without permission. In those cases, courts may step in and reverse the change, awarding the payout to the court-ordered beneficiary. If you’re facing this situation, it’s critical to have legal representation immediately.
Does Divorce Automatically Remove an Ex-Spouse?
In some states, yes automatic revocation statutes remove an ex-spouse as the life insurance beneficiary by law after a divorce is finalized. But these laws vary widely by state and don’t always apply to all policies, especially federally regulated ones like SGLI or ERISA-based employer plans.
Never assume your ex has been removed just because the divorce is over. If you die with the wrong beneficiary on file, your insurer may pay out to the named person even if they’re your ex.