When parents depend on child support to raise their children, they should protect that money with life insurance. If the paying parent dies before the end of their financial obligations, life insurance can supplement that income.
Parents have various options for setting up life insurance policies, each with different advantages.
The paying parents fund the insurance policy
The parents responsible for paying child support might choose to purchase their life insurance policies to ensure their children have access to financial support if they die. Occasionally, Florida courts require life insurance in a divorce. With this policy, the paying parent has control over the beneficiary.
- Minor children – Some paying parents prefer to have their children receive the payout if they die. However, if the children are under age 18, the money goes directly to the guardians.
- Co-parents – The easiest way to provide consistent support is to designate the other parent as the beneficiary. This designation allows the parent access to the support funds as quickly as possible.
The drawback to having the paying parents manage the insurance policies is that they can change the beneficiaries at any time. Should a parent remarry, have more children or decide to change their policies, the receiving parents may get nothing if the paying parents die.
The receiving parent purchases the life insurance policy
Another option for life insurance is for the parents receiving child support to purchase plans with the consent of the paying parents. Arranging the policies this way allows the receiving parents to manage the beneficiaries and ensure the policies remain in force until their children turn 18.
Life insurance is an excellent way to protect children’s financial security if the paying parent dies.
