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Family Law Blog

Comment on divorce & family law 

Insurance and divorce, some issues


Some lawyers and even some IFAs have a tendency to overlook insurance issues upon divorce in favour of considering the often more major investment and possibilities found in a pension. This can be unfortunate and there are traps for the unwary in a financial divorce settlement.

Premium payments are quite often ordered by the Court so as to maintain cover, but there are some things to watch for nevertheless:

Medical insurance cover
Let's say that the wife has a medical history that might lead to a fresh application for medical insurance being declined, or accepted with many exclusions or at a high premium. Then continuity of cover of the existing policy may be a relevant consideration. It can be possible to provide for that by way of an undertaking in a consent order. The moral of the stroy is to watch out for the temptation to simply agree a premium payment at the same rate as the existing policy.

Life insurance and endowments
The court has jurisdiction to order the transfer of a life policy, but it does not have the power to order a party to take out a life policy.
Notice of assignment must be given to the insurers and an acknowledgement should be sought. The receipted notice of assignment should be placed with the original policy document. Most companies produce their own pro forma for assignment but these should be checked carefully to ensure that they achieve what the parties intend.

Where life insurance is an issue the parties can agree that the paying party continue to maintain an existing policy for the benefit of the other.

Where a fresh policy is required and the paying party agrees to take out and pay for that cover, it is important that that party should only undertake to use best endeavours to take such steps. This will then cover the situation where the life to be assured is uninsurable. The intended beneficiary of the policy should also consider other provision that would secure their position in those circumstances.

An insurable interest? 
A former spouse or civil partner does not have an unlimited insurable interest in the life of the other. A former spouse would, however, have a limited insurable interest to the extent of loss of maintenance. For this reason it may be necessary for the life assured to affect a new policy.

IFA involvement
In my opinion, an IFA should be working with the lawyers from the very start to help identify these issues and solve them or help identify the cost of solving them.

Andrew Woolley
Divorce solicitor


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That is very good advice Andrew and I must remember those points as I am getting involved with more solicitors. I will include that in my presentations, thank you. ...

By Jennifer Nicholls on Thursday August 5, 2010

Jennifer:  I am really glad this was of use to an experienced IFA even! Thanks. I know you will help other firms understand these specialist areas much better than they do as of now. The more IFAs and family lawyers work together for the good of our clients getting a divorce, the better….

By Andrew Woolley on Friday August 6, 2010

you and your IFA contacts may find what we are offering of interest to your clients - A comprehensive insurance package of income protection for maintenance including unemployment cover and legal expenses for enforcement of consent orders.

See our website
for details.

By Henry Glasse on Wednesday August 11, 2010

Andrew, you have raised some very valuable points - I have discussed many of these with Solicitors I deal with on Pension Sharing and do try and get them to see if both sets of solicitors can come to some agreement with the other party concerning life cover to protect maintenance payments.
If a ex-spouse is ordered by the court to make ongoing maintenance payments the recipient should be made fully aware that these payments are often only able to be made whilst the payer is in employment and in receipt of income. Many solicitors have commented on how these simple things are overlooked as often individuals are too busy figting over the home or pension to even consider smaller things such as ongoing income payments (or lack of these should the payer die or be unable to work).
Hopefully with more collaberative divorces going through - this may help aleviate some of the tensions and have more amicable settlements agreed with Life Cover being organised whenever possible. At the end of the day, it is generally about taking care of the children.
It is my belief that Solicitors and IFA’s working together should always bring about more rounded solutions for all concerned! ...

By Stephanie Pickering on Saturday August 28, 2010

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