Split Apart: What Happens to My Insurance Plans if I Get a Divorce

Any major change in life is bound to have an impact on your finances. Be it a marriage, the birth of a child, the death of someone close, or a divorce, you must be prepared for financial turbulence that ensues from the event. Insurance policies are affected by such changes in life, too. This is especially true of divorce, which is an unforeseen event for anyone who must go for it.

Read more
Get ₹1 Cr. Life Cover at just ₹411/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
Tax Benefit
Upto Rs. 46800
Life Cover Till Age
99 Years
8 Lakh+
Happy Customers

*Tax benefit is subject to changes in tax laws. *Standard T&C Apply

** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines

Get ₹1 Cr. Life Cover at just ₹411/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
+91
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use

In the West, it is common to lay down the terms of divorce at the time of the wedding. But in India, where marriage is considered a sacred union for life, doing so is extremely rare.

This is despite the rising rate of divorce, especially in urban areas. Mumbai, Delhi, and Bangalore are among the cities that have seen an alarming rise in the divorce rate in recent years. For instance, there were five judges who handled divorce cases in Delhi in 2005. In eight years, the number of judges had gone up to 15.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

In cases of mutual divorce, the husband and the wife settle the financial aspects of their separation on terms that are acceptable to both of them. The details and the mode of the settlement lie in the hands of the parties involved. A divorce settlement can include any or no asset and amount of money. The couple only has to reaffirm the details of their separation in the court.

Importantly, the emotional aspects of the divorce should not be allowed to muddle financial matters. It is imperative that the husband and the wife list down all of their savings and assets, including retirement policies, house, car, and life insurance. They can take the help of a financial planner to guide them in the distribution of assets.

Handling Nominations

The first step a person going in for a divorce must take is remove the name of the spouse as the nominee in life insurance policies . Each of the partners involved in the divorce proceedings can select any of their blood relatives as the new nominee. For this, a letter mentioning the need for the change in nomination must be submitted to the insurer to make sure that the person selected  as the new nominee has ‘insurable interest’ regarding the life covered. Someone has an ‘insurable interest’ when the insured’s death directly leads to financial losses.

It is recommended that a person nominates his children as nominees. Of course, a former spouse can also be trusted to give the proceeds of the insurance policies to the correct beneficiaries.

Insurance plans require nominees so that claims can be disposed of quickly. In case the nominee is not the legal claimant of the proceeds, it is their duty to pass on the benefits to the legal heirs in accordance with the law or the will of the policyholder.

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.’ Assignment means the transfer of both rights and liabilities of the insurance plan to the assignee. This means that your spouse will have the sole rights regarding the plan. Any changes to the plan, including change of nominee or reassignment, will need the approval of the current assignee. Therefore, you must ensure that your spouse reassigns you the plan before the divorce.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

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.

Similarly, 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.

A divorce can be difficult for both partners. But planning can make things easier, specifically when it comes to finances. 

Written By: PolicyBazaar

Life insurance articles

Recent Articles
Popular Articles
How to Cancel SBI Life Insurance Policy?

18 Nov 2021

As per the Insurance Regulatory and Development Authority, you...
Read more
Max Life Insurance 1 Crore Plan

14 Oct 2021

With many novel diseases surfacing, life seems to be fleeting...
Read more
Life Insurance for Senior Citizens Over 70

14 Oct 2021

Although you may be past the opportunity to buy life insurance...
Read more
Life Insurance for Senior Citizens over 80

14 Oct 2021

If you are the bread earner for your family, no time is bad to...
Read more
Life Insurance for Armed Forces

14 Oct 2021

The Indian arm forces are our pride. They risk their lives to...
Read more
How to Check LIC Policy Status, Details, Statement via Online/SMS/Call
Last year, Mr. Rajiv Verma bought a Child LIC policy to provide financial security for his kid's future. However...
Read more
Surrender Value in Insurance
Surrender Value in Insurance Have you bought a life insurance policy which is not as per your requirement? Are you...
Read more
LIC Login: LIC Customer Login Process at Online Portal
The LIC login portal is user-friendly. With the LIC online login facility, customers can easily avail themselves of...
Read more
How to Check PLI Status?
How to Check PLI Status? Dating back to February, 1884, PLI (Postal Life Insurance) is one of the oldest life insurers...
Read more
Life Insurance: Checking Policy Status
Life Insurance: Checking Policy Status Buying life insurance policy is the first step towards building a corpus amount...
Read more
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL