Understanding Alimony Insurance

Alimony, outside of child custody, can be one of the most difficult aspects of divorce. For the payer, having to give a former spouse money is a tough pill to swallow. On the other hand, the recipient’s pride is on the line, and accepting money from his or her current spouse is not so easy to deal with, either. However, the truth of the matter is that a judge only awards alimony these days when he or she feels that the payments are necessary in order for the recipient to maintain a comfortable lifestyle. For most alimony recipients, this is precisely the case.

Many individuals rely on their alimony support each month to supplement their income and enable them to pay their bill payments on time. When alimony payments are late, if they stop arriving altogether, or if there is even a whisper that alimony payments are going to end due to the illness of the former spouse, the anticipated death of the former spouse, or a permanent disability sustained by the former spouse, it can cause feelings of panic in the recipients, as they are unable to financially support themselves. Fortunately, there is something called “alimony insurance.”

What is Alimony Insurance?

Alimony insurance is essentially a life or disability policy on the former, alimony-paying spouse. Though alimony insurance, like all other types of insurance, requires an annual premium, it effectively guarantees your income even if your former spouse were to become unable to work or pass away prematurely. Alimony insurance is difficult to obtain, though. Not only does the paying spouse have to agree to purchase alimony insurance, but he or she must submit to a physical and provide medical records, just as though he or she was buying life or health insurance. Additionally, if in older age (which many individuals are who are subject to permanent alimony payments), it can be difficult for the payer to get approved by the insurance company.

Problems With Alimony Insurance

Aside from the difficulty in obtaining alimony insurance, there are several other problems alimony recipients have in ensuring ongoing payments. For starters, it is expensive. Considering how important it is to supplement your income, you could find yourself paying alimony insurance premiums for years.

Furthermore, like life insurance policies, alimony policies have an expiration date. Your alimony policy may be good for the next 20 years, but if you find that both you and your former spouse are alive and well at the end of that time span, and if you need to change or renew your policy, you may be faced with the same problems as when you first got divorced, only this time, your former spouse may be less inclined to help you.

Finally, if you can convince your former spouse to acquiesce to alimony insurance, the premium amount needs to be added to the annual alimony budget, meaning that you will essentially be paying for the alimony insurance via your alimony payments. While this is not necessarily a bad thing, it could all be for naught if your former spouse goes on living and working as normal until after you pass away. Additionally, you will be taxed for the insurance until your former spouse needs it; only then will it turn into tax-free income.

Consult With a Dallas Enforcement of Judgments Attorney

If you are in the midst of a divorce or about to file for a divorce, but you first want to ensure that you will receive ongoing support payments despite what may happen to your former spouse, you have a few different options. While alimony insurance is a popular choice, you can also utilize an alimony trust or an annuity. To learn more about these options, and to determine which is the best for you, allow our Dallas enforcement of judgments attorney to explain each in detail and advise you on which is the best option for your particular situation. To learn more, call the Clark Law Group at (469) 906-2266 today, or contact our firm online.

(image courtesy of Jacob Culp)