Life insurance after divorce: the key points

Divorce can be financially and emotionally draining, not least because you’ll need to untangle the financial ties of your married life. As well as sorting out assets, property and possessions, you’ll need to consider what happens to your joint life insurance policy after divorce, if you have one.

Understanding life insurance and divorce settlements could help smooth the process.

Written by

Tim Knighton

Life, health and income protection insurance expert

Last Updated

26 JUNE 2024

6 min read

What happens to life insurance after divorce?

To understand what happens to your life insurance after divorce, you need to know the basics of the policy you have, including:

Whether it’s a single or joint policy
Who pays the premiums if it’s a joint policy
Whether the policy is held ‘in trust’
Whether the policy is tied to your mortgage.

While divorce rates in the UK are at their lowest since 1971, there were still over 80,000 divorces in the UK in 2022. So there’s potential for divorce to complicate many separating couples’ life insurance policies.

Below, we outline how divorce could impact each type of life insurance policy.

What happens to single policy life insurance after divorce?

Single life insurance policies shouldn’t really be affected by divorce. The only change you might need to make is the name of your beneficiary – the person meant to receive any pay-out.

Most policies allow you to change your beneficiaries at any time. When it comes to a single life insurance policy after divorce, you might prefer that your money goes to your children, relatives or a new partner if you die, rather than your ex.

On the other hand, if you have children with your ex-partner and your ex is the primary caregiver, you might want to keep them as the beneficiary so that they can take care of your children.

It’s a good idea to regularly review your life insurance to check you have enough cover in place – especially if there are children involved. If circumstances change, you may need to increase the size of any potential pay-out, known as the ‘sum insured’.

What happens to joint policy life insurance after divorce?

Joint life insurance after divorce is trickier to negotiate, since most policies can’t be split in two – unless the policy includes a ‘separation benefit’. This isn’t something that’s offered by all providers, so you’ll need to check your policy details to see if you have this in place.

For joint policies with no separation benefit in place, you have two choices about how to deal with life insurance after divorce:

One of you takes over the policy

For one of you to take over the policy, you’ll both need to agree to it, then contact your insurance provider and sign a legal document confirming the change of situation.

Whoever takes on the policy will be solely responsible for paying the premiums and will have total control over who benefits from any pay-out. If you have kids together and want to make sure their pay-out doesn’t get caught up in probate and any inheritance tax issues, you’ll need to put the policy in trust.

If the other person still wants life insurance, they’ll need to take out a new policy.

The policy is cancelled

You cancel the policy and each choose your own life insurance to suit your new situations.

Depending on your insurance provider, you might not need consent from your partner to cancel a joint life insurance policy. However, some providers require cancellation letters signed by both policy holders – check what’s needed before taking any action.

It’s also worth remembering that if you cancel a joint life insurance policy after divorce without your ex knowing, it would leave them uninsured and could have huge consequences for them and any dependents.

If you opt to cancel joint cover and you both want to take out new life insurance after your divorce, make sure the separate policies are in place before you cancel the joint cover. Your life insurance provider should be able to advise you of any costs involved in making changes to your policy.

It’s also worth comparing quotes if you’re taking out new life insurance. If you’re older and have developed any health conditions since you took out your joint policy, your premiums could be higher.

What happens to a life insurance policy ‘held in trust’ after divorce?

There are a few possible outcomes when a life insurance policy is held in trust and a couple choose to split up.

Because you’ve handed over legal ownership of your life insurance policy to someone else – your trustee(s) – you can’t cancel the policy.

And depending on how you set up the trust, divorce can cause complications if you then decide to change the beneficiaries:

If the policy is written in ‘absolute trust’, it’s unlikely you can change the beneficiaries.
If the policy was written in a flexible or discretionary trust, you should be able to change who receives a pay-out.

Talk to your divorce lawyer or the solicitor who set up the trust to see what your options are. It’s possible to write a joint policy in trust, but it’s not common. Typically, only single life insurance policies are written in trust.

Find out more about writing life insurance in trust.

What happens to mortgage life insurance after divorce?

If you have a joint life insurance policy on your mortgage and decide to sell your house when you divorce, you may no longer want the cover. You’ll need to come to an agreement on this together.

But if one of you decides to buy the other out, it might make sense to sign the insurance policy over to the new sole owner. If you’d prefer to cancel the existing policy and take out new mortgage life insurance cover, just be aware that the premiums may be more expensive if you’re older or in poorer health.

In some cases, divorced parents may keep joint ownership of a property. If this is the case, you might decide to keep the mortgage life insurance policy as it is, especially if you’re both contributing to the mortgage.

More tips on divorce and wills

As well as thinking about life insurance after divorce, don’t forget to amend your will if you want to change your beneficiaries. You might also want to think about changing the executor of your will or trustee, if this role previously sat with your ex.

Another thing to consider is what you want to happen to your assets if your former partner remarries.

Frequently asked questions

What happens to life insurance on separation?

If you separate after getting joint life insurance, you’ll need to either cancel the policy and take out two separate single policies, or decide between you to sign the policy over to one of you.

Life insurance providers don’t distinguish between separated couples and divorced couples. So, if you’re separated from your partner and they’re named as the beneficiary, they’ll receive the pay-out unless you change your policy.

How does separation benefit work?

Some joint life insurance policies offer a separation benefit or separation agreement option, which allows you to split your insurance into two separate policies if you divorce. Not all providers offer this feature, though, and there may be age restrictions.

Check with your insurance provider to see whether your policy includes a separation benefit.

Do I need to tell my insurance provider if I’m getting divorced?

No, you’re not legally obliged to tell you insurance provider about your divorce, but you should check how your cover might be affected if you divorce.

Can my former spouse collect my life insurance?

If your ex-partner remains the named beneficiary, they’ll automatically get the pay-out if you die while the policy is still running – even if you’re divorced. If you raise children with your ex-spouse, this may be beneficial.

If you don’t want your ex-spouse to receive the pay-out, you should contact your insurance provider and update the beneficiary, stating that you want your ex-spouse removed following separation or divorce.

What happens to death in service benefit after divorce?

If you have a death in service benefit from your employer and named your spouse as your beneficiary, your ex might still get the pay-out unless you remove their name.

Again, if you have kids, you might want your ex-spouse to receive the pay-out. But if you don’t, it should be simple to change your death in service beneficiary via your HR team or online employment benefits portal.

Can I take out a new life insurance policy on my ex?

Possibly, if you’re able to show you’d be financially impacted if they died. For example, where dependent children are involved, you may rely on your ex-spouse for income – such as child maintenance.

In this case – with your ex’s permission – you could take out a life insurance policy on their life because you have an ‘insurable interest’ in it. These types of policies are called ‘life of another’.

Essentially, you’d be paying for the life insurance policy to cover the death of your ex-spouse. The policy would belong to you and any pay-out would be made directly to you.

How do I cancel a joint life insurance policy?

To cancel your joint life insurance policy after divorce, contact your insurance provider.

Some providers will charge a cancellation fee, others will let you cancel free of charge. It depends on the provider. Just bear in mind that you won’t get back any of the premiums you’ve already paid.

You should also consider whether you need to take out new cover that offers similar protection for your new situation – ideally with no gap between policies.