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Single-name protection when a couple divorce

This article is part of
Guide to Divorce and Protection

If a single-name plan has been set up with the life assured also being the plan owner, which Emma Thomson, life office relationship director of LifeSearch, says is the case for nearly all plans, then the ex-spouse will not be paid any benefit in the event of death.

However if the life policy has been placed into trust with the former partner as a beneficiary, or if they are a trustee, the ex will benefit.

If under trust then Alan Lakey, partner of Hemel Hempstead-based IFA Highclere Financial Services, says it is possible to change the beneficiary so that the former spouse no longer benefits.

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If the plan was written on a life of another basis where the former spouse is the legal owner, then Mr Lakey says the only alternative is to cancel the plan and re-apply for cover.

If, as often happens, they are neither under trust or life of another then Mr Lakey says no action is necessary.

Phil Jeynes, head of account development at PruProtect, says it would be sensible to always review whether the single-life protection policies are adequate and relevant following the divorce.

Richard Sadler, head of retail protection at Zurich, says single life policies will have the guaranteed insurability option, which allows cover to be increased, underwriting free, in the event of a divorce.

But he says it may be necessary (as a requirement of a divorce settlement) for the ownership of a policy on the life of one divorce to be assigned to a former spouse (so as to ensure they continue to be protected).

In addition Mr Sadler says it is worth being aware that where a policy is in trust, the beneficiaries may need to be changed to reflect the divorce settlement.