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What Happens to My Life Insurance Plan if I Get a Divorce?

In India, just like marriages, life insurance policies are also considered valuable decisions. Therefore, life insurance plans may be subject to division or alteration in the event of a divorce. Understanding the impact of divorce on life insurance plans is essential for individuals going through this process, as it can have a direct effect on the financial security and well-being of the dependents. 

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In this article, we will understand what happens to life insurance plans in India when there is a divorce and what steps should be taken to deal with the situation.

Does A Divorce Impact Life Insurance Plan?

A divorce is a life changing event and with it comes an array of alterations in the life insurance plans attested to both the partners. The extent of the impact depends on various factors such as the specific terms of the policy, the ownership of the policy, and any legal agreements or court orders related to the divorce. Here are a few key points to consider for the life insurance plan during a divorce:

  • Nominee/Beneficiary Updation: If the ex-spouse is named as the nominee/beneficiary, the divorce may prompt the policyholder to update the beneficiary information. It is important to review and update the nominee to ensure that the death benefit goes to the intended recipient after the divorce.

  • Ownership and Premium Payments: The ownership of the life insurance policy may be affected by a divorce. If the policy is jointly owned by both spouses, they may need to decide on how to divide or transfer ownership of the policy. Additionally, if the premium payments were previously shared or made by the ex-spouse, new payment arrangements need to be established to ensure the policy remains active.

  • Sum Assured/Policy Amount and Premiums: After a divorce, the life assured’s financial situation may change, and therefore, reassessing the sum assured and premiums of the life insurance policy may be necessary. The need for coverage may increase or decrease depending on factors such as financial responsibilities, income changes, or new dependents.

  • Legal and Professional Advice: Due to the complex nature of divorce and its impact on life insurance, it is advisable to consult with legal and financial professionals. An attorney experienced in marriage/divorce law can provide guidance on the legal aspects of changing beneficiaries or ownership. Moreover, a financial advisor or insurance professional can help assess the appropriate coverage and policy adjustments.

  • Spouse as an ‘Assignee’: An appointee must be selected in case the nominee is a minor. The appointee will act as a caretaker in case of the death of the policyholder or if the plan matures. More complications can arise in case one partner names the other an ‘assignee.’ You must ensure that your spouse reassigns you the plan before the divorce. 

  • Policies such as joint life plans, which are not particularly popular in India, may have to be allowed to lapse as insurers don’t split such plans. 

  • Plans with an investment component, including endowment policies and ULIP Plans are settled according to the contribution of each partner. 

  • Health insurance companies provide the choice of removing the name of a beneficiary during the plan term, which means that the principal proposer is enabled to remove the name of the spouse.

*Note: Assignment means the transfer of both rights and liabilities of the insurance plan to the assignee. 

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What Is The Importance of Married Women Property Act 1874 (MWPA) In Life Insurance After Divorce?

The Married Women's Property Act 1874 (MWPA) plays a crucial role in protecting the interests of married women regarding life insurance policies. It empowers them and safeguards their rights in terms of life insurance policies, especially in the event of a divorce. Here are some key reasons why the MWPA is important in the context of life insurance after divorce:

  • Preservation of Policy Benefits: The MWPA allows a married woman to protect the benefits of a life insurance policy from being controlled or claimed by her former spouse or creditors. It establishes a separate right for the woman, ensuring that the policy's claim amount remains secure and accessible to her, even if she is divorced.

  • Nominee/Beneficiary Protection: Under the MWPA, a married woman can be designated as the irrevocable beneficiary of a life insurance policy. This means that the life assured (her ex-spouse) will not be able to remove her as the nominee/beneficiary. The MWPA safeguards the woman's right to receive the policy benefits, as intended, providing financial security and independence.

  • Financial Provision for Children: In cases where children are involved, the MWPA enables a divorced woman to secure life insurance coverage for her children’s financial security. She can ensure that the claim amount will be used to support and provide for the children's well-being, even in the event of the life assured’s death. 

  • Protection from Creditors: The MWPA protects the death claim amount from being claimed by the life assured’s creditors. This is particularly important after a divorce when the policyholder may have financial obligations or debts. By establishing the policy as the separate property of the married woman, it cannot be seized by creditors seeking to satisfy the policyholder’s debts, offering her a level of financial security.

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How To Deal With A Life Insurance Plan After Divorce?

Below mentioned are the ways how you can deal with a life insurance plan post divorce:

  • Notify the Insurance Company: Once you have made decisions regarding nominees/beneficiaries, coverage amounts, and ownership, contact the insurance company to inform them about the changes. They will guide you through the necessary paperwork and documentation required to update the policy accordingly.

  • Policy Division: Life insurance policies are usually considered individual assets and can therefore, be divided between the partners during the divorce. If a husband has assigned a policy to his wife but is still paying the premiums, he can request to regain ownership of the policy. For policies with cash value, the couple should consult their legal advisors and the insurance company to determine the appropriate course of action.

  • Re-evaluate the Sum Assured/Policy Amount: Evaluate whether the current coverage amount is still appropriate after the divorce. Consider factors such as changes in financial responsibilities, income, and dependents. Adjust the coverage amount if necessary to ensure it adequately meets your needs and financial obligations.

  • Maintain Premium Payments: Ensure that premium payments are made without fail to keep the policy active. Failure to pay premiums could result in lapsation of the policy, thereby, leading to loss of coverage.

Wrapping It Up!

After a divorce, certain changes may need to be made to a life insurance plan, like updating beneficiaries, transferring policy ownership, or adjusting coverage amounts. Hence, it is important to review the policy and consult with professionals to make sure that it aligns with the new circumstances. By taking these steps, both the partners can ensure that their life insurance plan continues to provide the intended financial protection for themselves and their loved ones after divorce.


  • Is it possible for a spouse to modify the designated beneficiary?

    Ans: If a spouse is designated as an Irrevocable Beneficiary, then no, the spouse cannot make changes to it. The purpose of this designation is to ensure that it remains unchanged. Some individuals opt to designate their children as irrevocable beneficiaries, recognizing that their financial responsibilities towards their children will persist indefinitely.
  • Can the ownership of a life insurance policy be changed after divorce?

    Ans: Yes, the ownership of a life insurance policy can be changed after divorce. It may involve transferring ownership to one party or canceling the policy altogether, depending on the divorce settlement and individual circumstances.
  • Is it possible for an ex-spouse to still be named as a beneficiary?

    Ans: Even after the finalization of a divorce, an ex-spouse or their family members may continue to be designated as beneficiaries in specific legal and financial documents, such as wills and insurance policies. This can be the case regardless of any settlement agreements that have been made.
  • How to calculate the term insurance premium online?

    Ans: You can easily calculate the term insurance premium online by using the term plan calculator online tool
  • What are the benefits of term life insurance?

    Ans: Here are 4 common benefits of term insurance:
    • Low premium rates
    • Tax Benefits
    • Death Benefit
    • Long term coverage
  • What are the benefits of term life insurance?

    Ans: Below mentioned are the key features of a best term insurance policy in India:
    • Affordable premium rates
    • Long-tenure life protection
    • Easy to understand and buy
    • Riders availability
    • Whole life protection
    • Tax benefits
  • What are the key features of a best term insurance plan in India?

    Ans: Let's understand what is term life policy here. Term insurance offers financial protection for a certain period to the policyholder, thereby, offering a lump sum payout if the policyholder unfortunately passes away during the policy term.

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