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What happens to life insurance after a divorce?

Emma Lunn
Written by  Emma Lunn
5 min read
Updated: 12 Dec 2024

Life insurance is a type of insurance policy that provides your loved ones with a cash lump sum in the event of your death.

Key takeaways

  • Married or cohabiting couples can either take out two single life insurance policies, or one joint policy.

  • If you have a single policy you can continue with the cover in the event of divorce, but you might want to change the beneficiary so it’s not your ex-partner.

  • If you have joint life insurance, you will need to change or cancel the policy on divorce.

Father and daughter sitting at desk smiling

What happens to single policy life insurance after a divorce?

A single life insurance policy covers one person and will pay out to named beneficiaries if that person dies within the policy term.

If a divorcing couple both have single life insurance policies, things are fairly straightforward as both individuals can carry on with their single policies. However, you may want to check you still have an appropriate level of cover for your new financial situation, and that you can still afford premiums.

Divorce will not change the beneficiaries on your life insurance policy automatically. You will need to complete a “change of beneficiary” form from your insurer. If your policy names children under the age of 18 as beneficiaries, it can be written in trust for them until they become adults or a guardian can be appointed.

Legally, you can change your life insurance policy after a divorce. However, consulting a solicitor is advisable to ensure these changes don't violate any divorce settlement terms or other legal agreements. Sometimes, divorce decrees require maintaining life insurance for the benefit of children or an ex-spouse.

What happens to joint policy life insurance after a divorce?

A joint life insurance policy covers two people on a single policy but only pays out once – usually on the death of the first person.

If you have a joint life insurance, you will need to take action when you get divorced. Your options will be:

  • Splitting the policy

Life insurance ‘separation benefits’ allow policyholders to split a joint life insurance policy into two individual policies after a separation. Not all providers offer separation benefits.

  • One person takes over the policy

This means the other person will need to arrange a new policy for themselves if they still want cover.

  • Cancel the policy

This would mean neither of you is covered unless you then purchased single policies. Although a simple option, cancelling and starting again can be expensive as premiums increase as you get older and you would need to complete medical screening again.

What happens to mortgage life insurance after a divorce?

Many people take out life insurance when they get a joint mortgage.

This insurance settles the mortgage if one of them dies, easing the burden on the surviving partner. After a divorce, the best course of action depends on whether the marital home is sold or if one partner stays living in it.

If the home is sold, the existing policy may become unnecessary. The mortgage it protected will be cleared with the sale proceeds. Both parties may then need new policies for any new mortgages.

However, if one ex-partner keeps the home and assumes the mortgage payments, the policy will need to be reviewed. For example, the policyholder may want to update the beneficiary so it is no longer the ex-spouse.

If the property is remortgaged in the name of the person keeping the home, a new mortgage life insurance policy will usually be needed.

What happens to life insurance policies when separated?

If you have separated but are not yet divorced, you should update your life insurance. If you’re separated from your partner but they’re still named as the beneficiary on your life insurance, they’ll receive the pay-out unless you change your policy.

The same applies if you were cohabiting, but not married, and then split up. You’ll need to either cancel the policy and take out two separate single policies, split the policy or arrange for one person to take over the policy.

A ‘legal separation’ is a way of separating without getting a divorce. Separation alters your marital status but does not terminate your marriage. Any life insurance policies naming your spouse as a beneficiary will remain unchanged unless you act to change them.

If you don’t want your estranged spouse to benefit from your policy, contact your insurance provider to make necessary changes. This may involve changing the beneficiary to another family member or a trust.

How separation agreements might dictate changes to life insurance

Separation agreements often contain clauses regarding life insurance coverage.

These clauses may require you to maintain your spouse as a beneficiary throughout the separation or until a divorce is finalised. This ensures protection for any children or financial agreements made.