What is Disability Insurance in Divorce?

What is Disability Insurance in Divorce?

Latrice Knighton is a member of the Sterling Law Offices partner team and an award-winning divorce attorney, life coach, and speaker. She helps clients resolve their problems by using legal techniques and smart tactics learned through decades of experience as well as helping clients by offering the best practical advice.

by | Mar 14, 2019

Many factors affect a person’s disability benefits. This can include a person’s income, financial resources, employment history, even after their marriage has ended.

Financial security for the people they care about is something that a lot of people consider when going through a divorce. With this in mind, it is important to be aware of your opinions for insurance and what the best option for you could be.

This session will discuss divorce disability insurance. Listen to Michael Smith, of CPS Horizontal Financial, for the benefits and explanation of the insurance while in the process of a divorce.

What is a divorce decree?

When a divorcing couple agrees to terms, the payment is based upon the payer’s ability to make and work payments.

Should the payer become sick or injured and not be able to continue payments, it crosses peril for both ex-spouses.

The divorce decree is the legal document which lays out the terms of the divorce:

  • Payments- child support, spousal support
  • How much, how long
  • Insurance- health, life

What is divorce disability insurance?

The insurance policy follows the terms of the divorce decree and assures child support and maintenance payments (alimony) are made, should the payer become disabled and cannot work.

What is the “Disability Risk”?

  • Disability of the Payer is three times more likely than death
  • The Payer suffers huge financial strain trying to continue ongoing payments (even reduced payments) while paying his/her own living expenses and managing a major medical problem.
  • The financial impact on the recipient and children of the receiving reduced payments or no payments at all is catastrophic.
  • If the Payer is disabled everybody suffers: the Payer, Recipient, and children.

What can divorce disability insurance help with?

It helps when the Payer is disabled and cannot work.

If they Payer is disabled then the policy:

  • Continues the remaining payments demanded by the decree
    • Child support
    • Spousal support
    • Private school and college expenses
    • Activity expenses — sports, clubs, etc…
    • Children’s medical expenses
    • Buy-out of a business or other property
    • Any obligation other than the proceeds from the sale of a property/asset

Who can purchase the policy?

The policy can be purchased by either ex-spouse and benefits can be paid to either ex-spouse as well. The benefits do not offset other disability coverages. For example, if someone has disability insurance through work then they can keep that benefit for income and then use the disability divorce insurance to help cover the terms of the divorce decree.

What are some takeaways from this presentation?

If it appears that the payer looks to be paying at least $3,000 per month in support/alimony, obtain a quote for divorce disability insurance.

What does divorce disability policy do to benefit me (and/or both parties)?

  • The Payer’s obligation to pay is satisfied
  • The Payer can use existing resources to manage medical problems and personal financial issues
  • The Recipient receives 100% of the payments demanded from the decree

Who is the divorce disability insurance designed for?

  • Designed for white and gray collar occupations
  • Some blue collar occupations allowed if income warrants
  • If it appears the payer looks to be paying at least $3,000 in support/alimony, it would be worth your time to obtain a quote
  • Quotes can be modified as final settlement is reached
  • Can be obtained during or after divorce is final

How can clients contact you?
Michael Smith, LUTCF
President
CPS Horizon Financial
(414) 427-8660
[email protected]


References: Michael Smith and Contact Page, CPS Horizon Financial Website

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