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How To Settle Your Term Insurance Plans In Case Of Divorce?

How To Settle Your Term Insurance Plans In Case Of Divorce?

Divorce has become a common phenomenon in modern urban households today. There has been an alarming rise of divorce cases in cities like Delhi, Mumbai and Bengaluru. As per data in 2005 Delhi had 5 judges to handle to divorce cases but when you see today’s number it has gone up to a number of 20. When we compare the same in parlance with West there is phenomenon of laying down rules to be followed post divorce during the time of marriage but when we consider India things are quite different. Most Indians consider marriages as a holy affair so the concept of laying rules before hand is always ignored but in case of a divorce like situation or any similar situation which is either unforeseen or even planned can lead to lot of turmoil in the financial plan of any person.

Though divorce has a lot of emotional baggage associated with it but it should muddle with the financial affair of any person. Any wrong decision can lead to a long term effects on the financial health of any person. A right mapping of assets (which involves financial assets like term insurance plans, investment plans etc or other form of assets like real estate) where the couples are connected in joint relationship or an owner nominee relationship should be done with proper planning so prevent post divorce massacres.

From the perspective of insurance which might involve nominee or assignee relationship or investment related insurance plans should be looked in the perspective as given below

How to handle nominations? In case the nomine in your existing term policy is your wife or husband then try to remove her or him before the legal settlement of the divorce agreement and re-nominate somebody new with whom you have a blood relationship and make sure that new nominee has direct insurable interest from you. Insurable interest means that in case of death of the proposer of the term plan the new nominee has direct economic loss.

Read Also - Reasons: Why You Should Buy Online Term Insurance Plans

Insurance companies always need legal nominations to settle claims but in case the nomination is not settled at the time of divorce then can create unnecessary hassle.

How to handle assignment? In case the nominee in your term policy is somebody who is minor and your spouse holds the assignee rights then again things like this can create trouble post divorce. As an assignee the person enjoys whole rights and liabilities in your plan so you should carefully re-assign a new person before the divorce settlement complete. The reassignment need to done way before the divorce settlement because for any change in the nominee or assignee in your term insurance agreement you always need the assignee’s agreement so get away from this hassle this is the obvious right approach.

So it is always advised in case of term insurance or any other form of insurance whatsoever so you should always handle case of emotional turmoil like divorce in the most planned way or otherwise it can lead financial mismanagement also leading to unmanaged finances for long period of term.