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The importance of life insurance in a divorce agreement

When Texas parents of young children are contemplating ending their marriage, they often try to negotiate a settlement agreement that will deal with spousal and child support, among other matters. However, they often fail to take into account what will happen to the recipient should the payer die prematurely. One thing that should be considered is the procurement of a life insurance policy.

In the case of alimony, the parties will traditionally agree upon how much the monthly payments will be and for how long they will last. If, for example, the amount to be paid is $1000.00 each month and the duration is 10 years, then it would be relatively simple to determine the present value of $120,000.00 and to require the payer to have a life insurance policy in that amount. The payer would likely want to have the opportunity to reduce the face value of the policy over time as payments are made.

Child support can go through a similar analysis. While many couples agree that the obligation should end when the child turns 18, others have it continue through college. In the latter case, the face value of a separate policy covering this should include tuition, room and board, fees, books, transportation if applicable, and incidentals.

A well-drafted settlement agreement will cover other divorce legal issues as well, such as property division and child custody and visitation. Many couples prefer trying to negotiate such an agreement with the assistance of their respective family law attorneys rather than proceeding to litigation. A trial can be costly, and the ultimate decision would be in the hands of a judge rather than the parties themselves.

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Law Office of B. Diane Heindel, P.C.
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Law Office of B. Diane Heindel, P.C.