First, a key lesson for anyone who suddenly becomes single, whether through divorce or widowhood: avoid making financial decisions during an emotional time.
Where to Put the Death Benefit Payment?
Beneficiaries of their deceased spouses' life insurance typically receive the death benefit proceeds tax free. One urgent question is whether to leave the death benefit on deposit with the insurance company. The advantages of this option are that the insurance company's "settlement account" will typically earn a higher interest rate than what you will earn at your local bank. The insurer will also issue a checkbook for the surviving spouse to draw on the account as often as necessary.
Increase Insurance Coverage or Not?
If you still have children who are financially dependent on you, it's advisable to either purchase or increase your life insurance coverage. But remember that this need may diminish when the children are self-supporting adults, so consider term insurance as an option for this part of your insurance portfolio.
Changing Beneficiary Designation or Not?
If you become single due to divorce, you'll want to think about changing your beneficiary designation on life insurance policies. If your divorce agreement requires it, you may also have to purchase life insurance to provide funds for support of any minor children.
Where to Put the Death Benefit Payment?
Beneficiaries of their deceased spouses' life insurance typically receive the death benefit proceeds tax free. One urgent question is whether to leave the death benefit on deposit with the insurance company. The advantages of this option are that the insurance company's "settlement account" will typically earn a higher interest rate than what you will earn at your local bank. The insurer will also issue a checkbook for the surviving spouse to draw on the account as often as necessary.
Increase Insurance Coverage or Not?
If you still have children who are financially dependent on you, it's advisable to either purchase or increase your life insurance coverage. But remember that this need may diminish when the children are self-supporting adults, so consider term insurance as an option for this part of your insurance portfolio.
Changing Beneficiary Designation or Not?
If you become single due to divorce, you'll want to think about changing your beneficiary designation on life insurance policies. If your divorce agreement requires it, you may also have to purchase life insurance to provide funds for support of any minor children.
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