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What happens to joint life insurance after divorce?

Even the most peaceful divorces can become raging emotional fires during a divorce. Both sides hide in their corners, defending their rights to divide a shared life into equitable assets. But what happens to the joint insurance? Let’s find out.

  • Jan 17, 2023

    Key takeaways

    Options for joint life policy during a divorce

  • Split the policy
  • End the policy
  • Remove one person

Marriage is a very happy life milestone. It’s never too early to buy life insurance, whether you’ve recently gotten married or are getting ready for the big day. Unfortunately, a lot of marriages eventually fail and end in divorce. Couples frequently choose joint life policy as protection, but what happens to your policy if you get divorced?

In light of this, knowing how a divorce might influence your joint life insurance policy is preferable. Let’s review what a joint life insurance policy is and how it operates first.

What is Joint Life Insurance?

A single-life insurance policy can cover two people under a joint life insurance policy. If the policy is taken out on a “joint life first death” basis, your insurer will pay out a lump amount to the surviving policyholder if one of you passes away.
Many couples choose a joint life insurance policy because it will be less expensive than two single insurance plans. Because you have to pay your insurer one set of premiums, it also be simpler to handle the policy. You will lose your coverage if, for any reason, you stop paying your premiums.

Types of Joint Life Insurance Cover

It’s crucial to comprehend the various types of life insurance that are available when purchasing it as a couple. Whole life insurance and term life insurance are the two main types of joint life insurance after divorce coverage.

Whole life insurance

Your entire life is covered with whole insurance. It is typically the priciest kind of cover. But regardless of when you pass away, your family will receive a payout (as long as you continue to pay your premiums!).

Term life insurance

Term insurance protects you for a predetermined amount of time, not your entire life. Only if you pass away within the coverage period will your policy payout (i.e., during your policy term). Although term life insurance is frequently less expensive than whole life insurance, your loved ones have not ensured a payout.

What happens to joint life insurance after a divorce?

Unfortunately, if the couple decides to call it quits on their marriage, here are three options for the couples to choose from.

Split the policy

Some insurers let you divide the policy after divorce, so make sure you contact your insurer before making the final decision. If one partner identifies the other as an assignee, further issues may result. “Assignment” refers to the passing of the insurance plan’s rights and obligations to the assignee.

This indicates that your spouse will be the only party with rights to the plan. The present assignee must consent to any modifications to the plan, including any changes to the nominee or assignment. As a result, you must ensure that your spouse gives you a new plan before filing for divorce.

Remove one person

Contact your insurer to see if you can simply remove the other from the policy if only one of you wants to keep the policy. Any blood relative of the parties to the divorce may be chosen as the new nominee by each party. To ensure that the person chosen as the new nominee has “insurable interest towards the life covered,” a letter explaining the need for the change in nomination must be sent to the insurer. When the insured’s death causes immediate financial losses, someone has an “insurable interest.”

Status of life insurance during a divorce


The person designated by an insured to manage their financial assets after their passing is known as the policy nominee. This is often the spouse in a marriage. The insured must take care to remove the soon-to-be ex-spouse from the nominee list while the divorce processes are ongoing.

When the insured passes away, it can then be transferred to another person with an insurable interest or someone who experiences a direct financial loss. Before divorce proceedings are finalized, this life insurance divorce decree must be fulfilled.


A beneficiary, such as parents, a spouse, or children, receives financial gain from the insured’s life. Both spouses typically designate the other as the beneficiary of their insurance policy. The insured must designate someone with an insurable interest as the beneficiary after dividing assets through divorce procedures. The insured must alter the beneficiary as soon as possible and notify the insurer.

Irrevocable Beneficiary

This kind of beneficiary is unchangeable. When the insurance policy is issued, the choice is set. Even after a divorce, the death benefit cannot be changed if the spouse is an irrevocable beneficiary.


A couple’s life insurance policy is not a top concern during divorce. It can become invisible under hardship, such as during a divorce. However, the ex-spouse, children, or other beneficiaries may pay a high price if ignored. Therefore, during such proceedings, one must settle the issues about life insurance assets to maintain financial stability. Although it is a difficult decision to make in such a volatile situation, both parties must put emotion aside to protect their financial futures.

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Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life

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