In divorce, it is not uncommon for one person to pay alimony to the other for a period of time. The amount and length of payment depends of a variety of circumstances and is not the subject of this post. Often, a divorce agreement will specify that the person paying alimony must have a life insurance policy in force for the length of the alimony obligation that names the ex-spouse as sole beneficiary. When the issue arises, the person who is being asked to secure the insurance often reacts with surprise and anger.
In short, alimony is payable to an ex-spouse because he or she earns significantly less than the person paying alimony, or is disabled, or has been out of the workforce for so long that he or she must obtain job training skills before being able to earn a decent wage. There are other reasons, as well, but those are the main reasons. Let’s assume that the person paying alimony were to die in the 2nd year of that obligation. That leaves the ex-spouse without a portion of their income source. If that person is undergoing job training (or is in school to earn a degree toward a career), that could be devastating. Thus, the life insurance obligation.
It is important to remember that the person obligated to obtain that life insurance is able to purchase decreasing term life insurance, meaning that the amount of the insurance (and thus the cost of the premiums) will drop each year by the amount of the alimony already paid to the ex-spouse.
It’s really quite simple. If you (the payor) are not alive to make your alimony payments, your life insurance policy will step in and do it for you.
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copyright 2012 Irene C. Olszewski, Esq.
