Financial safeguards for women who are divorcing, divorced or remarrying

By Steve Savant

This is a basic retail prospecting letter that’s received some significant traction.

Target market: women who are divorcing, divorced and or remarrying

Your ex passes away unexpectedly and your support payments disappear. The solution is simple and, in most cases, cheap. Buy an inexpensive term life insurance policy on your ex for a period lasting at least until your kids are out of college or until your spousal maintenance runs out, whichever is longer.

And of course, the best way to protect yourself on a new policy is to own it yourself so you have complete control. Cross-owning spousal contracts is increasingly popular.

You may already have policies in place that are sufficient. Make sure the premiums are kept up to date. If you do not own the policies personally, then make sure you are set up as discussed above to gain access to information on the policy. Work with your attorney to make sure all this is done legally and that the court orders the ex spouse to provide the insurance coverage for the period needed.

Seek the help of a professional insurance representative, who can help you make the most of existing life insurance or to find inexpensive term life insurance. And while you're at it, consider placing life insurance on yourself to provide for your kids if you pass away prematurely. You can set up a trust to be the beneficiary until the kids are of majority (age 18 in most states). You then put a trustee in place to invest the life insurance proceeds and provide for your kids until they are of majority age status.

If you get remarried, make sure you insure your new spouse; especially if any of your support payments go away upon marrying a new person.

Finally, as a rule of thumb, buy $100,000 of face value life insurance for every $4,000 of annual income you need to replace in the event of an early death of your ex. Or, divide the annual income you need to replace by 0.04 on a calculator to get the amount of capital you may need to invest to replace the income. For instance, if you need $40,000 per year, divide it by 0.04 to get the $1,000,000 face amount estimate of what you may need. This may sound like a lot, but you may find it very cheap if the ex is in good health. This might cost somewhere between $50 and $100 per month, based on age and health. Your professional insurance representative can help you determine the right amount for your needs and provide you with quotes with quality carriers.

You may think your ex may not qualify for coverage at all because of health. But don’t give up too soon, you might be surprised about who is insurable.