mortgage life insurance after divorce

Vicky123

What happens to mortgage life insurance after divorce? Does it need to be changed even if only one person is paying but both names stay on the mortgage agreement? Also do home buildings and contents have to be informed of changes?

jaybeetoo

You should deal with matters such as life assurance policies as part of the divorce financial settlement. One partner can agree to sign over the benefits of the policy to the other person. You'll need a legal document to do this (which has to be signed by both partners and witnessed) which should then be lodged with the life assurance company.

Vicky123

The only benefit was if one spouse died the mortgage would be paid off in full, no one mentioned it at financial resolution, just occurred to me now. Solicitor did advise getting a will to ensure my share of the home goes to the children or the ex and his family could try and stake a claim, he didn't ask about insurance pay outs. Maybe it's just as long as it's short, just trying to tie up loose ends, is the insurance still valid f they haven't been told we are no longer married?

jaybeetoo

Your solicitor should have asked you about all investments, property, pensions, life assurance polices etc. as they are assets to be split (or not) on divorce. If there is stuff not included in the financial settlement there is nothing to stop the ex coming back and claiming more money later (and vice versa).

The policy is still a joint asset as long as somebody keeps paying the premium. The life assurance company doesn't care if you are still married or not. At the moment, there is nothing to stop your ex claiming the proceeds if you die. You need to get a form from the insurance company to assign the proceeds of the policy to one of you regardless of who dies first. Alternatively, you stop paying the premium and the policy lapses and any value is shared between you and your ex (unless the financial settlement says otherwise).

Is the life assurance policy assigned to the mortgage? If so, it will pay that off first before any distribution to you or your ex.

Do you still have a joint mortgage with your ex?

andyfromotley

It depends.

You need to know what type of insurance you have and who it will pay out.

My ex and i had level term insurance which pays out £135k if one of us dies before 2025. It pays out the other party or our estates if we die together. Whilst we bought the policy to cover our mortgage there is nothing to reflect this in the policy, they are just going to pay out £135k in cash.

In our case we wanted to keep the policy, i rang the insurance company they assured me that divorce does not affect this, they will still pay out to the named parties. (you need to change the name on it if one of you reverted to their maiden name)

If it was directly linked to your mortgage and that mortgage no longer exists then i guess you no longer need the policy?

Life insurance policies no value unless one of you dies.

Ignore any answers that refer to life assurance, that is a different product. That is part insurance part investment. I presume you don't have this?

jaybeetoo

When I divorced, my ex and I were very clear about who had which policy and we assigned policies to each other to avoid any misunderstanding or comeback later on.

Vicky123

It's a reduced term mortgage insurance, just pays the remainder should one or other die, but I'm wondering as the house has been signed over to me it would only pay out if I die even though he retains an interest.
He doesn't contribute to the mortgage but his name remains on it, my worry is the children may not be protected if I die first.