What Happens to Your Term Insurance Plan Post Separation?

Term Insurance Plan

Term Insurance Plan

Financial planning is an important step to safeguard your future. Providing your family members with financial safety in your absence is necessary today. Given the increasing uncertainties of life, investments in life insurance policies are increasing rapidly.

One of the popular life insurance policies is a term life insurance plan. Commonly purchased by married couples for securing the future of their respective spouses and children, a term plan is easy to understand, customise and compare using a term insurance premium calculator

But what happens when a married couple files for a divorce? Does the term insurance plan get impacted? Who gets the benefits of the term insurance plan?

Let us discuss the impact of a divorce on a term insurance plan below.

About Term Insurance

Before diving deeper into managing a term insurance plan post-divorce, let us quickly understand what a term insurance plan is. It is a category of life insurance plans offering pure life coverage to a policyholder for a period or tenure ranging between 10 years to 30 years. 

The main purpose of this insurance policy is to provide financial protection to your nominated beneficiaries in case of your untimely demise.

When a couple decides to file for a divorce, they must divide their shared assets equally or in mutual agreement. A term insurance plan falls under the category of assets and thus needs to be divided or resolved properly.

Changes in Term Insurance Plan Post-Divorce

Before the divorce, the term Insurance plans purchased by the couple must be revised. These plans are usually either joint policies or basic term life insurance plans with cross-nomination of beneficiaries as the other spouse. 

Here are some ways you can manage your term insurance plan post-divorce.

Designation of Beneficiary

In most marriages, the beneficiary for any term insurance plan is the spouse, meaning the death benefits will be given to your spouse only. However, post-divorce, the designation of the beneficiary will have to be revised and shifted to another individual like a family member, friend or the children. Most life insurance policies allow you the flexibility of changing beneficiary designation if required.

Policy Ownership

In some cases, like joint policies, the ownership of the policy might also be connected to your marital status. If the spouse is the policy owner during the marriage, transferring the ownership to yourself after the divorce is necessary. 

This will give you complete control of your financial tools and allow you to make changes like amending the coverage amount as required.

Pending Premium Payments

If you and your partner collectively made the premium payments for the term insurance plan post-divorce, deciding who will take sole responsibility for the premium payment is a necessary discussion. 

You can continue doing it together or shift it to one person. Premium payment is crucial to ensure the policy is up and running.

Married Women Property Act

This act came into existence to safeguard the finances of a female. If the term insurance plan is purchased under this act, the payout can only go to the wife and children of the policyholder. 

However, in case of a divorce, if the policy is bought under the MWP Act, the beneficiary cannot be changed at any given point. This means the claim settlement will only be given to the wife, even after divorce.


Divorce is a big decision and can have an impact on both your mental and financial health. Your term insurance plan also requires necessary amendments post-divorce to ensure that the financial future is intact for both the individuals involved in the divorce. 

You need to look into redefining the designation of the beneficiary, taking or transferring ownership, and updating other aspects like coverage and premium. The end goal is to plan correctly and ensure that the complexities of the current situation do not harm the protection you want for your loved ones.