Avoiding a Divorce Hazard – Cross Ownership of the Life Insurance Policies


Avoiding a Divorce Hazard –   Cross Ownership of the Life Insurance Policies

It is easy to become overwhelmed when buying life insurance.

I cannot tell you how many divorcing people have sat across from me and bemoaned the fact that the higher earning divorcing spouse will not pay for a life insurance policy through the separation period and support period while the lower/non-earning spouse is still financially dependent on the other higher earning spouse for alimony and child support.

Not a pleasant thought. By arranging the cross ownership and beneficiary policies from the beginning (in friendlier times), the issue of who pays for the insurance in the divorce situation has already been settled. As owner and beneficiary of the policy/ policies covering the other spouse, each spouse simply maintains coverage for as long as needed. Most importantly, if the higher earning ex-spouse were to pass away while under child support and alimony obligations, the lower earning or non-earning spouse would receive insurance benefits to continue providing for the family. Isn’t this what the insurance was for anyway?

Scott Anderson, CPA, CFP®, EA is the CFO and Vice President of Tax Strategies for GW Financial, Inc. He earned his MBA from Stanford University. Scott has spent over 35 years in corporate accounting and finance, including experience with several entrepreneurial opportunities in venture capital startups and corporate turnaround situations. He has served as Chief Financial Officer for two emerging public companies and has his own active practice in tax, financial, and investment planning for individuals and small business owners.


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