When a spouse has an insurance policy in Connecticut, whether the policy is subject to distribution between both spouses in the event of a divorce depends on a variety of factors. First of all, Connecticut uses equitable division rather than a community property system. Another factor is the type of policy that it is. A final factor in determining whether the policy is subject to the property division agreement is the intent of the policy.
Community property states generally equally divide a couple’s assets equally between them. Assets and debts acquired during the marriage are generally considered to belong to both spouses. However, in equitable division states like Connecticut, a judge can evaluate several factors in determining what would be an equitable distribution of the assets to the couple.
A judge may order a life insurance policy to be cashed in if it is a permanent life insurance policy. These policies have a cash value that can be accessed by the insured at certain points. However, term life insurance policies do not typically have a cash value, and the owner of the policy maintains the right to change the beneficiary.
A factor that may be considered is the original purpose for the life insurance policy. Some individuals get a life insurance policy so that they can pay off a mortgage or other household debts. This purpose may be thwarted if a judge awards the other spouse the house. In other cases, life insurance may be taken out in order for the other spouse to support minor children. In these types of cases, it may be best to keep the life insurance as is to maintain this purpose.
Connecticut family law attorneys may be able to discuss these concerns with divorcing spouses. They may make recommendations regarding the property division and assist with dividing other assets as well.
Source: Fox Business, “Don’t I Get Half of My Ex’s Life Insurance Policy?“, Jack Hungelmann, May 06, 2013