Life Insurance

It is typical for divorce agreements to contain a provision requiring an alimony payor to maintain life insurance to secure his alimony obligation and one, if not both parents to maintain life insurance to secure their obligations to their children.  In fact, Jennifer Millner, a contributor this this blog, and a partner in our Princeton office, recently did a post entitled Child Support Obligations Live on After Death, addressing what happens when a support obligor does not have the required life insurance at his death.

It is also typical for someone to cover their life insurance obligations through insurance they get as a benefit of their employment.  Many companies, for example, offer as a benefit, life insurance – one times their salary, three times their salary – for example.  What happens when someone leaves their job and loses this life insurance?

That issue was addressed by the Appellate Division in an unreported (non-precedential) opinion released on April 1, 2011 in a case entitled Starr v. Starr.  In this case, to secure his alimony, in the divorce agreement, it provided that, "Defendant shall designate plaintiff as a beneficiary of $150,000.00 of the proceeds of the group life insurance made available to him through his employment."  However, in 2005, he was given notice that his employment was terminating.  He did have the option of converting his group life insurance to an individual policy but he did not. Continue Reading If You Think that Your Job Related Life Insurance Is Enough, Think Again

Failure to carry life insurance as required in divorce related to will support will not relieve the estate of the decedent.   In a recent case where a decedent’s estate challenged the right of the ex-spouse to enforce an obligation to carry life insurance, a trial court’s decision to force the estate to pay was  upheld.   As most people with children who are divorced know, the typical settlement agreement or judgment of divorce contains an obligation to carry some amount of life insurance in order to replace a parent’s child support obligation in the event of that parent’s untimely death. Luckily, statistics say that the life insurance will not be needed, but as we all know, sometimes tragedies happen.

Such was the case in the recently decided matter of In the Estate of John P. Boyle,deceased.  To view the case, click here  In that matter, John P.was divorced from his wife, Susan, in July, 1995. They had one child, John M.Boyle. The judgment of divorce provided for a term of alimony to be paid to Susan as well as for child support on behalf of John M.. At the time of divorce, he was obligated to maintain a $250,000 life insurance policy for his ex-wife and his child. When the alimony obligation was finished, the beneficiary of the policy was to be his son. Relevant to this case was the provision that the decedent was to “continue to provide a life insurance policy through his place of employment in the amount of $250,000…” When the alimony obligation ended, John  P, the father changed the beneficiary designation to his son, John M. Continue Reading Child Support Obligations Live On After Death