Do I Need to Tweak My Life Insurance for My Second (or Third) Marriage?

Las Vegas's Estate Planning Resource

Marriage isn’t necessarily simpler the second time around, especially when it comes to your finances. For one, when you remarry — or marry for the first time later in life — you are faced with what best to do with assets you acquired before you tied the knot again, including your life insurance coverage.

Tell a Friend

Money’s recent article entitled “How to Adjust Your Life Insurance for a Second (or Third) Marriage” reminds us that an important part of remarriage is re-examining all things financial. This includes your life insurance.  The article provides a quick guide on entering into a new marriage in a way that ensures that your insurance needs are in order.

Couples should start by discussing their financial holdings, spending habits, health concerns and any debts acquired before the marriage. Make sure to account for current assets and future expenses, such as retirement bills, college tuition, mortgages, funeral expenses and potential medical bills.

A big concern of divorcees entering a new marriage is what will happen at their death to assets, such as insurance policies and other aspects of their estate, including family inheritances. Life insurance proceeds will be paid to named beneficiaries no matter what the instructions are in a last will or other estate planning document. A significant error is forgetting to update their beneficiaries on their life insurance policies. Nothing is worse than having a new spouse and then having him or her discover that your life insurance was paid to an ex.

For most, it’s an easy decision to change the beneficiary to the new spouse. However, if you have children, you may want to leave a policy to them that might help pay for future expenses, like college.

In this situation, you may want to name multiple beneficiaries in your life insurance policy to make certain that all your loved ones are adequately covered.

You could also create a revocable trust living trust that distributes your assets after your death to beneficiaries as designated (this type of trust can be modified or revoked as you want when you’re alive).

Removing an ex from a policy is not always possible because in some instances, a former spouse may have to stay as a beneficiary, if you owe them child support. Talk to your attorney before changing beneficiaries to be sure that you don’t violate the divorce decree.

Regardless of your situation, consult both an experienced estate planning attorney to see what’s the best plan for you and your family.