Divorce and the Valuation of Life Insurance Policy

At the Orange County Law Office of David P Schwarz we have litigated numerous Divorce issues involving Life Insurance Policys contracted during the the marriage. Please contact our office at 949 735 9266 or via the web. We can also be reached by email at dpslaw66@gmail.com.

A Divorce lawyer can fight for you in Court to determine the tru value of the Whole life insurance Whole life insurance is usually valued at its cash surrender value (ordinarily established in the policy). However, this is not a “hard and fast” rule. Special circumstances may make cash surrender value unrealistic. For example, if the insured is no longer “insurable,” the value of a whole life (and possibly a term life) policy is probably not its cash surrender value, because the policy cannot be purchased any longer.

A Divorce lawyer will also help you determine the benefits you can receive from a Term life insurance. Term life insurance policies are more problematic. The threshold issue, of course, is whether the community has any interest at all in the policy; though courts have taken various approaches to the issue, the latest authority concludes the community interest ordinarily continues only for the balance of the term beyond the date of separation paid for with community funds/efforts.

Under the Spengler approach, future coverage under a term policy is divisible community property only if the renewal right can be classified as a “property” interest (i.e., an enforceable contract right rather than a mere “expectancy”); and that turns on whether the right to renew is wholly within the insured spouse's control.

At the Orange County Law Office of David P Schwarz we will help you and the Court determine the outcome of a Term life insurance policy by looking at several criteria. A community interest in future term coverage continues if (i) separate estate paid final premium with part community/part separate funds; (ii) insured spouse became uninsurable before he/she began paying premiums with SP; or (iii) insured spouse could not have purchased comparable policy at comparable price when he/she began paying premiums with SP.

A Divorce lawyer will have a very difficult issue to resolve with the Court in determining the value of the term life insurance policy. If it is found that there is a community interest in the renewal right, it becomes difficult for the court to determine how the interest should be valued. The only clear law confronting the term policy valuation issue has been when the the renewal right in the case was a mere “expectancy.

A Divorce lawyer will argue the law and show the court that the argument in favor a solid valuation of the term policy is focusing on the community interest in a term for which the premiums were paid with community funds. We will argue that the Court should examine factors such as the face value of the policy, the amount of the premium, the insured's life expectancy, whether the policy is convertible to whole life, replacement cost, and when, if ever, the policy “vests” and is deemed fully paid.

At the Orange County Law Office of David P Schwarz we will clarify any discrepancy of the court regarding term life insurance and whole life insurance policy. Please contact our office at 949 735 9266 or via the web. We can also be reached by email at dpslaw66@gmail.com.