Life changes after divorce but your insurance needs may not. A little bit of planning to consider some of life’s “what -if’s” will ensure you have a backup plan (or as I like to call it, a safety net) in the event of unexpected circumstances.
Protect your Income First
Now you are single (and even if you have re-partnered, you may want to remain financially independent) you need to consider income protection. Income Protection is designed to provide you with a regular income in the event you are unable to work due to illness or injury. If you experience ill health, worrying about how you will pay the rent or mortgage and put food on the table is terrifying and often makes our problems seem insurmountable. Income protection means money will still come in and you can focus on your recovery rather than the bills. Income protection can appear expensive (although ask anyone who has ever needed to claim and they will sing its praises) but you can structure this cover in a number of different ways to meet all budgets.
Future Proof Your Child Support
Something that is a little harder to talk about, what will happen to your finances if your ex-partner dies unexpectedly? Your ex may no longer be a part of your everyday life, but they may still be a part of your financial life. Depending upon your circumstances they may be paying child support, spousal maintenance or a combination to assist with household and children’s expenses. That money will possibly cease if they pass away. Ensuring your ex has some life cover in place to provide for the children you had together is vital. The amount should be large enough to fund the child support payments until the children are grown up.
Most people have life insurance inside super and so an option may be nominating the children to be the beneficiary of that policy. For some families, implementing a personal life insurance policy for each family they have (this is more common than you think, many people are in their second or third marriage) is an option to ensuring each family has access to the funds they may need.
You may also choose to own the policy on your ex-spouse and pay for the premiums, this will ensure you have control over the policy and can take comfort in knowing the premiums are being paid and the policy is in force.
There are some really important and complex considerations in the structuring of life policies that can save you tax or from your insurance proceeds ending up in the wrong hands so please seek specialist insurance advice and meet with an estate planning expert. We are able to connect you to the specialists you need.
This information contained in this document has been provided as general advice only. The contents of this document have been prepared without taking account of your personal objectives, financial situation or needs. You should, before making any decision regarding any information, strategies or products mentioned in this document, consult with your GPS Wealth Ltd financial adviser to consider whether it is appropriate having regard to your own objectives, financial situation and needs