HOW TO USE LIFE INSURANCE TO GUARANTEE ALIMONY

The recipient of alimony may wish to seek an agreement or court order to guarantee support in the event of the payor’s death. The usual method of guaranteeing support is to require the payor to maintain an insurance policy on their own life with the recipient as beneficiary. The amount of the policy should be high enough to compensate for the loss of alimony payments. 

To ensure that the insurance policy remains in effect, the recipient may seek to require the payor to provide periodic proof that the policy is still in force. This could be accomplished by having the payor provide an annual copy of the policy showing full payment of premiums for the coming year. The recipient also may seek to have a provision in the policy that would require the insurance company to notify the recipient if payments are not made on time. 

As an alternative to an insurance policy, the parties might agree that the payor will post a bond or that the payor will guarantee to leave the recipient a certain amount of money by will or by a trust to ensure continued support. Another option is to have the payor sign a limited irrevocable assignment of income from his or her pension plan to guarantee the alimony payment. Such a provision would require that alimony payments be deducted from the payor’s pension plan if the payor did not make payments directly. 

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