How To Use Life Insurance To Protect Child Support
Jon: Well, one of the other places where this goes, this is some actually, creating need for additional life insurance where people may have not thought about it before.
Let me give you an example. Let’s say a husband and wife Divorced.
And as a result the husband has to pay some support to the wife on a monthly basis for X number of years whatever that maybe.
Maybe until the child is 18 or something like that. Well, what happens if something were to happen to that primary wager, the father the male in that scenario?
Well, same what happened in the not many would stop coming. So a lot of times what people would do and they do this to benefit their children too, is to go ahead and take a life policy.
So for example, the husband or the ex-husband would take a life policy out and the wife would be the owner, excuse me, the owner of that life policy.
She would own it. By all the means that means she has all the rights to it.
She can decide who the beneficiary is. She can make changes to the policy.
Meanwhile the husband or the ex-husband is the payor. He is the one that pays the policy.
So he might pay the premium on each month for the policy. And then the beneficiary is either the wife or the children.
So that way if something were to happen to the husband, some unfortunate accident, the wife would still continue to have proceeds being able to be paid to her without even him being there.
So it’s not a double tragedy.
Tim: Yes, and I’ll set this stage for you on this, just in details. So we’re talking about, let’s say a wife in this case, we’ll use the same scenario.
Stay at home mom, 20 years never work and that’s in our town that happens quite a bit.
Tim: A husband working full time job maybe close to retirement or what have you, you get Divorce.
Now there’s going to be spousal support well same child support as well unto the next…
Tim: And if he were to die, the payments would literally stop.
Void any retirements or anything like that where the beneficiaries been for purposes of alimony, spousal support and child support.
Those things they will just stop. There’s no more income. There’s no other place to get this.
Jon: And where would you go?
Jon: There’s nowhere to turn to. And the courts can’t help you at that point.
Tim: Right. That’s it! The risk is spouse if the payor spouse dies, the spousal support stops instantly.