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Disability insurance to protect divorce decrees

When a couple divorces in New Jersey, it is not uncommon for one spouse to be ordered to pay spousal support to the other spouse. The recipient of such support may feel confident that their needs will be taken care of after the divorce. However, such divorce decrees are not foolproof.

A concern in a high-asset divorce is what will happen if the spouse paying support is suddenly not able to because they die. If this event occurs, the divorce decree will no longer be in effect. Insurers have flooded the market to offer traditional life insurance in such cases. Family law lawyers have responded by including the purchase of such insurance in divorce agreements. However, this insurance product does not protect the recipient spouse in case the insured becomes disabled. In this event, the spouse may have a disability insurance policy that replaces up to 60 percent of the insured person's income, often not leaving enough for them to meet additional obligations under a divorce decree.

Individuals who have agreed to pay support as part of a high-asset divorce settlement may have to ask the court to modify the obligation if their income dropped by 40 to 100 percent. However, this option leaves the dependent spouse in a precarious financial position, often completely unexpected. A new insurance product is being offered by underwriters that would provide the payments that are due under a divorce decree if the paying spouse becomes disabled. It is being included in some divorce settlements.

Individuals who are going through a high-asset divorce may wish to consult with a family law attorney to learn about their obligations in case of an income change. A lawyer may recommend taking out additional insurance to safeguard client interests.

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