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Taking insurance against a former spouse

This article is part of
Guide to Divorce and Protection

While a divorcee no longer has an automatic insurable interest in his/her former spouse, Alan Lakey, partner of Hemel Hempstead-based IFA Highclere Financial Services, says there is an insurable interest with regard to ongoing maintenance or school fee payments.

Therefore Mr Lakey says the receiving spouse can effect an insurance - typically a family income plan - to protect the future intended payments.

While he/she does not need permission for this, Mr Lakey says there will have to be some form of agreement involved because the insurance company will wish to obtain health/occupational and pastime information.

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To put any agreement on a legal footing, Mike Allison, head of protection at Paradigm Protect, says divorcing spouses can agree for policies to be effected and maintained for the benefit of the children and be subject to the court order.

But in order to do this, Mr Allison says both parties must be in agreement for this to form part of the financial settlement.

Mr Allison says: “Ultimately at divorce there is normally a change of financial circumstances affecting the family therefore advisers should help guide their clients to consider these financial implications and act accordingly.

“It is a crucial time to review the liabilities including maintenance orders and help to decrease the future financial burden in case of death or illness.

“Given the increased numbers of people getting divorced, and the number of children staying in full-time education with increasingly expensive tuition fees, this may also be looked at in order to help with those fees should the worst happen.”