Life Insurance: Can Husbands Remove Their Wives?

In the United States, a spouse can be removed from a health insurance policy during open enrollment or within a certain time frame of a qualifying event, such as divorce or legal separation. Once a divorce or annulment is finalised, the ex-spouse typically loses coverage, though there are exceptions. For example, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers to keep providing health insurance for an employee's ex-spouse for up to 36 months post-divorce. Before a divorce is finalised, a court order is generally required to remove a spouse from a health insurance policy.

Removing a wife from a life insurance policy

In most cases, removing a spouse from a life insurance policy is not as simple as making a change during the open enrollment period. Life insurance policies, especially those provided by employers, have specific rules regarding beneficiaries and eligibility. A spouse can only be removed from a life insurance policy during open enrollment or within a certain time frame after a qualifying event, such as divorce or legal separation. It's important to review the insurance policy and understand the specific guidelines and restrictions.

During divorce proceedings, standard family law restraining orders, also known as Automatic Temporary Restraining Orders (ATROs), come into effect. These orders typically restrain individuals from making changes to insurance beneficiaries, including life insurance policies. Removing a spouse from a life insurance policy during this period without a court order can lead to legal challenges and potential repercussions. It is advisable to consult with an attorney before making any changes to your life insurance policy during divorce proceedings.

If you are the policyholder and wish to remove your wife as a beneficiary, you may need to provide a signed and written stipulation to the court for approval. This is to protect yourself in case of unforeseen events, such as a major illness or accident involving your spouse. It is important to note that insurance companies may have different requirements and processes for removing a beneficiary, so it is essential to review their specific guidelines.

In some cases, individuals may choose to keep their spouse on their insurance policy even after a divorce. However, this option is often challenging, as health insurance companies typically do not permit divorced spouses to remain on the policy. The insurance company may cancel the coverage or allege insurance fraud if they are not notified of the divorce. Therefore, it is crucial to carefully consider the implications and consult with an experienced attorney before making any decisions.

It is worth noting that removing a spouse from a life insurance policy can have significant consequences, especially if there are dependent children involved. The removal of a spouse may impact their coverage and eligibility. Additionally, there may be financial implications associated with changing the beneficiaries of a life insurance policy. It is always recommended to seek professional advice and carefully review the specific circumstances before making any changes.

Divorce and life insurance

Life insurance is often overlooked during divorce proceedings, but it is an important part of the process, especially if children are involved. It is necessary to make the required beneficiary changes, account for the cash value in whole or universal life policies, and protect alimony and child support income.

Beneficiary changes

In most cases, married people with life insurance list their spouse as the primary beneficiary. After a divorce, especially an acrimonious one, you will likely want to remove your ex-spouse as the beneficiary. Most life insurance policies are revocable, meaning the policy owner can change the beneficiary at any time. However, some policies appoint irrevocable beneficiaries, who cannot be changed once designated. If you want to change your beneficiary after a divorce, contact your life insurance agent to verify if the policy is revocable and to redesignate your beneficiary.

Cash value

Some life insurance policies, such as whole life and universal life policies, accumulate cash value over time. This cash value is considered part of the couple's net worth and should be listed among the marital assets to be divided. In a divorce where assets are split evenly, each spouse would receive half of the cash value from the policy.

Alimony and child support

If you have primary custody of your children and receive alimony or child support, it is essential to protect this income in the event of your ex-spouse's death. You can do this by maintaining a life insurance policy on your ex with a benefit amount high enough to replace the lost income until the children are grown. If your ex-spouse is not financially contributing to your children's upbringing, you may want to be the "policy owner" to ensure they cannot remove you as a beneficiary without your approval.

Life insurance for single parents

If your ex-spouse is no longer in the picture, and you are a single parent, it is crucial to take out adequate life insurance on yourself to protect your children financially. To determine the minimum benefit amount, calculate the number of years until your youngest child turns 18 (or 21 for extra safety) and multiply this by your annual income.

Open enrollment periods

During the open enrollment period, individuals can take the time to review and compare different health insurance options to find the best plan for their needs and budget. This is particularly important for those seeking more affordable coverage options or looking to switch to a spouse's policy. By carefully considering the available choices, individuals can save on out-of-pocket costs and avoid potential difficulties with insurance providers.

For those considering switching to a spouse's health insurance policy during the open enrollment period, it is essential to ensure that the timing is right and that they are eligible for any applicable special enrollment periods (SEPs). Switching during open enrollment is generally straightforward, requiring individuals to cancel their current plan and enroll in their spouse's policy. However, it is crucial to ensure that both policies follow the same plan year and effective date to prevent any gaps in coverage.

Additionally, it is important to verify that the spouse's policy meets the individual's specific needs regarding covered services and available providers. This includes confirming that any dependent children's specific primary care physicians are included in the spouse's policy network. By making these considerations during the open enrollment period, individuals can ensure they make informed decisions about their health insurance coverage for the upcoming year.

Outside of the open enrollment period, changing health coverage can be more challenging. Individuals may encounter issues with mismatched coverage periods between their current and new plans, potentially resulting in a gap in coverage until the next open enrollment. However, certain circumstances, such as specific life events or income changes, may trigger a special enrollment period, allowing individuals to make changes to their health insurance outside of the standard open enrollment window.

Qualifying events

A qualifying life event (QLE) is a significant change in life circumstances that allows you to adjust your insurance coverage outside of the usual open enrollment period. These events typically include major life milestones.

In the context of life insurance, a QLE would permit you to remove your spouse from your policy. Divorce or legal separation is one such event, but it is important to note that you cannot remove your spouse from your insurance before the divorce is finalised. Once the divorce is finalised, your ex-spouse will no longer meet the requirements to be covered under your policy.

Other qualifying events include the death of a spouse or dependent, a change in the dependent's eligibility status (e.g., a child aging out of the policy), a change in employment status for you, your spouse, or a dependent, an increase or reduction in work hours affecting eligibility for the health plan, the beginning or end of other health coverage, and becoming entitled to or losing entitlement to Medicare or Medicaid.

It is important to note that you must act promptly after a qualifying event, as you typically have a limited window of 30 to 60 days to make changes to your policy.

Legal separation and life insurance

In the event of a legal separation, the covered spouse and any dependent children will need to consider their options for health coverage. If the covered spouse has an employer health plan available, they and their dependents may be eligible to special enroll in that plan. Alternatively, they may be able to special enroll in health coverage through the Marketplace.

During a legal separation, the covered spouse and any dependent children may also be eligible to continue their existing health coverage for up to 36 months. The plan should notify them of their right to purchase extended health care coverage under COBRA. Most plans require eligible individuals to make their COBRA election within 60 days of the plan's notice.

It is important to note that the laws regarding spousal rights to Social Security and retirement benefits may vary depending on location. Under current US law, retirement assets may be the biggest financial asset in a marriage. Therefore, it is crucial to carefully divide these assets and review your overall financial situation before and after a divorce. Income typically drops for partners after a divorce, especially for women.

In the case of a divorce, legal separation, or child support order that causes the enrollee to lose a dependent or cease to be a dependent, a special enrollment period (SEP) runs for 60 days following the divorce, legal separation, or court order. This allows the enrollee to enroll in a different plan, with coverage taking effect on the first day of the month following the new plan selection or the first day of the second month following the selection, depending on the state and effective date rules.

Frequently asked questions