The Forgotten Insurance: Life Insurance To Secure Alimony & Child Support

When we all think of insurance, we often think of medical insurance, car insurance and homeowner's insurance as these seem to be the necessary and everyday types of insurance. Life insurance, which for some can be synonymous with high premiums, is one of the first costs to go when seeking to reduce your budget. I often find that the issue of life insurance is something that typically does not cross a person's mind when they are getting divorced, whether they are the supporting spouse or the supported spouse, especially if the parties did not maintain life insurance during the marriage.

Often times however, when a supporting party has an ongoing alimony and/or child support obligation, a court may order (or the parties will agree) that a life insurance policy will continue (or be implemented) as a method of financially protecting a dependent party and/or child in the event of the supporting party's premature death.

In other words, the same reasons an intact family would procure life insurance, remain after the divorce. All too often however, an obligation to maintain life insurance is the forgotten provision of a divorce settlement agreement in that either 1) it is noticeably absent from the agreement, or 2) it is not being maintained. Obviously, either of these scenarios is troublesome for the supported spouse and could ultimately cause substantial financial ruin should a situation that life insurance seeks to protect against come to fruition.

In the recent case of Ashmont v. Ashmont, Judge Lawrence Jones recently released an unpublished (non-precedential) yet persuasive opinion on how to deal with the issue of life insurance between divorced parties. In Ashmont, the parties' Marital Settlement Agreement required that the wife would receive permanent alimony and child support for the parties' children. In order to secure same, the parties agreed that the husband would carry life insurance as a means to protect against the loss of financial support in the event of an untimely death.

Several years after the parties were divorced, wife brought an enforcement action against the husband for a breach of their agreement for his failure to provide proof that he was maintaining life insurance as well as for sanctions for his past and alleged ongoing violations of his life insurance obligations. At the time of the hearing, husband admitted that he had been in violation of this obligation, but had recently brought himself into compliance by securing a...