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Life insurance policies provide payouts for families in the event of a loved ones’ death. It’s a way to make sure your family has something to support them in the event of your passing. 

But what happens to that policy if you get divorced? 

The answer to this can vary depending on what you want to happen. Some people want to keep their ex-spouse on their policy; others don’t. And if you have children, you definitely want to make sure they have support if you pass away. 

Talking to our experienced attorneys at Diamond Estate Planning Law can help you make sure your wishes are reflected throughout your divorce process and after. Here is some information on how you can expect your life insurance policy will be affected.

How divorce affects an Illinois life insurance policy

In Illinois, an ex-spouse may or may not receive life insurance benefits when a divorce is finalized. 

Illinois is what is called an “automatic revocation” state. This means that your former spouse may be automatically removed as a beneficiary on your life insurance policy when your divorce is finalized.

For most people, this means you will have to designate a new beneficiary. It is not usually a good idea to do that while in divorce proceedings are pending, but you can declare your intent as a protection of your wishes. 

Although the revocation is supposed to be automatic, there are exceptions.

If your life insurance policy is through your employer, that plan may fall under the Employee Retirement Income Security Act of 1974 (ERISA). This means automatic revocation may not apply which means your ex-spouse may stay on and receive the benefits, just as if you were still married. 

The best thing to do to avoid a mess is update all of your beneficiary designations after your divorce is finalized.

How divorce affects your ex-spouse in Illinois

There are some other exceptions to the above Illinois automatic revocation rule.

Automatic revocation does not apply to the ex-spouse if:

  • Divorce judgment designates the ex-spouse as a beneficiary;
  • The insured redesignates the ex-spouse as a beneficiary after the divorce; or
  • Ex-spouse is the designated beneficiary for the benefit of a child or other dependent of the insured.

Of course, if you want your ex-spouse to stay on your policy, you can make sure that happens by: 

  1. Stating your intent during the divorce and in the final court order; and
  2. Redesignating your ex-spouse as the beneficiary after your divorce is finalized. 

It may seem unnecessary, but if you pass away during divorce proceedings and want your ex-spouse to stay on your policy, there is no way to guarantee that without sharing your intent in court. Sometimes, folks aren’t aware of the automatic revocation rule at all, which means it can become an unexpected burden to the ex-spouse in the future.

Note: Under Illinois law, it is possible that some accrued interest on the policy can be divided between spouses in a divorce.

How divorce affects your children

Illinois law used to require life insurance to secure child support, but not anymore. 

Instead, what the court can do is order the parents to get a life insurance policy if they think it’s in the best interest of the children. 

If you have a good relationship with your ex-spouse, keeping them on the policy may be a good idea to provide a means for your children to still have support if you pass away. Or, you may want to create a trust to hold the money for your children. Whatever the case, communicating your wishes before divorce and officially updating the policy after divorce is important.

Contact our dedicated team at Diamond Estate Planning Law

Without the right team, your life insurance policy may easily be forgotten. With Diamond Estate Planning Law, you can count on insightful communication, clear explanations, and dedication to the simplest and most efficient way to solve complicated problems. Contact us today to get started.


DISCLAIMER: Any information contained herein is solely for informational purposes and is only applicable in the state of Illinois.  While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, we urge you to contact a local attorney for advice pertaining to your specific legal needs.

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