When couples in Texas divorce, a major part of the process will focus on the division of assets. There are many areas to cover and reaching a fair agreement can ensure that each spouse comes out of the divorce with solid finances. Insurance policy claims are an area that should not be forgotten.
The importance of insurance policy claims
As couples negotiate, they do not simply look at the present value of each asset since there are many factors that might affect their long-term value. Some values will be affected by tax implications, such as cashing out a retirement fund early. Other values might be affected by the investment that must be made to keep them, such as the upkeep of a family home. Insurance policy claims might be overlooked because their value might not be available immediately, yet they might affect how total assets are divided when their value is included in the discussion.
Texas laws regarding insurance policy claims during divorce
If insurance policy claims are not directly addressed in the divorce settlement, the court follows certain rules. These include:
- Non-awarded insurance policies that are in effect when the divorce is finalized will remain in effect until the policy expires
- If only one spouse was listed as a beneficiary of that policy, only that spouse will continue to receive the payment
- If both spouses were listed as beneficiaries, they will both receive the correct proportion of the payment
- The insurance company must provide appropriate payment even if either of the spouses fails to update the endorsement of the policy after the divorce
- Former spouses retain the right to pursue an interest in a proportion of an undivided life insurance policy
While life insurance policies are often required to secure financial support payments, other types of policies should not be overlooked. These claims can help you achieve a stronger settlement.