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That issue was addressed by the Appellate Division in an unreported (non-precedential) opinion released on April 1, 2011 in a case entitled Starr v. Starr.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.