The run up to Christmas can be incredibly stressful, both financially and on your relationships at home.
Although Christmas is the most wonderful time of the year for many of us, it also leads to the period in the New Year when the most divorces are filed in the UK.
It seems that many strained relationships wait until Christmas is over and done with, whether that for the sake of their families or children, or as a make or break to see if they can keep hold of their marriage.
Generally, divorce applications and enquiries lower in December, only to rise considerably as we enter the new year. Divorce is not something people consider out of the blue. January is the time for New Year’s resolutions and new starts in life, and that is often the prompt people need to take that formal step of ending their relationship.
The Christmas period tests relationships for a number of reasons:
Spending Too Much Time TogetherAfter seeing a rise in divorce after the lockdowns of 2020 and 2021, it’s not hard to believe that married couples who spend a lot more time together during the holidays may struggle.
With January being a time where most people look to make a change, and December often a time for personal reflection, spending time together over Christmas can make people realise that their relationship is just not working.
Financial PressuresDecember is usually the month with the highest expenditure throughout the year. This in turn can put strain on relationships. Financial worries can cause arguments and disagreements, which some marriages can’t recover from.
Spending time with family and in-lawsFamily feuds tend to come to a peak over the festive period, whether that be with your extended family or close-knit circle. Pressures of visiting relatives, family arguments and split loyalties can cause cracks in a relationship and can often be the last straw in a marriage.
AlcoholAccording to the National Statistics Office, alcohol consumption increases on average by over 40% over the festive period. Alcohol affects people in lots of different ways, and can often lead to arguments or unreasonable behaviour, which in turn can break a relationship.
Divorce over the Christmas PeriodIf you do unfortunately decide to divorce, it can affect your finances in many different ways. One of which is your life insurance policy.
We look at the differences between individual and joint life insurance policy after divorce. We also look at how it affects named beneficiaries, and how to change them.
Many people take out life insurance when they first buy a home together and get a shared mortgage. In this sense, if one of you was to pass away, the other would receive money to pay off the debt of the remaining mortgage owed.
After divorce, this kind of insurance may not be right for your circumstances anymore.
If you both decide to sell the family home and go your separate ways, cancelling the joint life insurance after the divorce settlement makes the most sense. You can then go on to get your own insurance suitable for your new living arrangements.
It can often be difficult to decide what to do, but our expert team is on hand to offer impartial advice during a difficult time.
Life insurance and divorceAs we’ve already mentioned, couples do tend to often take out joint life insurance policies when they take out a mortgage or start a family together. There are many reasons for this – sometimes it costs less than if an individual took out a policy on their own.
After divorce, you have two options:
If you are looking to take out an individual life insurance policy, some providers ask you to name a beneficiary. That person will receive the pay out if you pass away. Previously, this may have been your spouse, especially if you had a mortgage together. If you do not name a beneficiary, it goes to your estate and they will sort who gets the pay out.
After a divorce, you may prefer for the pay out to go to a different next of kin such as your children or new partner, or it can even go to friends or a charity.
Changing life insurance beneficiary during a divorce depends on your provider and the type of trust it is in. With some policies, you cannot change the beneficiaries, some you have to let your trustees know and others you just tell your provider. We can help you with any changes you would like to make and see if we can update your policy.
It’s important that you tell the new beneficiary, so they know to claim if you die, as well we your ex husband or wife so that they are aware of the change too.
Your second option is to transfer the policy to just one partner, although this is not always possible. It depends on your provider and any health issues you may have. If it is possible, they will then need to keep up payments alone. Depending on the circumstances of your divorce, this might be tricky to negotiate. To transfer the policy to one partner, you need to complete a legal document with both your signatures agreeing to the change.
This approach might be right if one person is keeping the home or taking more custody of children, as the pay out may be more useful to them. If you are planning on taking the home on alone, you would have to contact your mortgage provider as some would want you to pay off the mortgage in full first. They can help you make the decision that is best for you.
Your Life insurance beneficiaryIf you are able to change your life insurance beneficiary after you are divorced, it is worth thinking through your options as it will all depend on your circumstances.
If you have children together, you might decide you want a pay out to go to them.
If you die before they turn 18, you will need to put this money in a trust. The trustee will look after the money until your children are old enough to manage it themselves. This could be a solicitor, or someone close to you like a sibling or relative who you can trust.
Alternatively, you might prefer to change the beneficiary to someone else, knowing they can look after your family and debts once you are no longer around. If you do want to, you can keep your ex as your beneficiary too, depending on the terms you are leaving things on.
Do I need to let my life insurance provider know if I’m getting divorced?As part of your admin when getting a divorce, it is worth telling your life insurer about your change in circumstances. Life insurance divorce guidelines vary from one provider to the next.
Your policy is usually provided based on certain facts about your lifestyle and circumstance, so updating them is always best.
Do life insurance policies form part of a divorce settlement?In some cases, life insurance is irrelevant to the settlement, whereas in others it could be very important, so it is worth contacting your insurer to check.
If you each hold individual life insurance policies, it will not affect the settlement. You have been paying into your life insurance policy separately anyway, so the only change you would need to sort is your beneficiary.
Joint life insurance policies after a divorce are relevant to the settlement, depending on the kind of policy you have and what you choose to do.
If you sell your home and have no children, it might be worth cancelling your policy and starting afresh.
If one of you decides to stay in your home, the person leaving needs to transfer their right to the policy over. However, they could reasonably argue they’ve been paying into that fund for several years and may want some form of compensation seeing as they now won’t benefit from it. Some providers do allow you to split the policy evenly, however it is not always possible.
An alternative is to agree to keep the policy going but change the beneficiary to your children, so you know that if either of you were to pass away, the money goes to them either way.
Getting Through ChristmasIf your relationship is getting closer to the end, but you’re wanting to get through Christmas first, you’re not alone. January is the most popular time of year for starting divorce proceedings.
January 7th is dubbed ‘divorce day’ in the UK, as many couples take the first step towards accepting that their relationship isn’t working by seeking advice about getting a divorce.
If you’re planning to put on a brave face for the sake of your family over Christmas, remember in these situations, you and your partner need to look after yourselves too.
The new year marks new beginnings, and many people use it as a time to make big changes in their lives for the year ahead. If it’s time to part ways, it will make everyone happier down the line.
Good luck and if you need any support with your life insurance policy, our expert team are on hand to help you review your life insurance policy and find you a new policy that you’re happy with. Get a quote today.