Article on An Ex-Spouse’s Life Insurance Beneficiary Status and Automatic Revocation Upon Divorce

Kristen Raymond  (University of Connecticut School of Law) has recently published an article entitled, Double Trouble- An Ex-Spouse’s Life Insurance Beneficiary Status and State Automatic Revocation Upon Divorce Statutes: Who Gets What? 19 Conn. Ins. L.J. 399 (2013). Provided below is an excerpt of the article:

Although the marriage rate in the United States has declined in past ten years, ¹ the divorce rate has consistently hovered around fifty percent. ² Fifty percent of first marriages end in divorce, sixty seven percent of second marriages end in divorce and a staggering seventy four percent of third marriages in the United States fail. ³ While many Americans are aware of rising wedding costs, ⁴ they don’t realize that divorce can cost just as much. The US divorce industry generates about $ 28 billion a year, with the average cost of divorce estimated at about $ 20,000. ⁵ Although many couples take into account the high divorce rates before their wedding by signing a prenuptial agreement, ⁶ few Americans realize that simply saying “I do” may give their soon-to-be ex-spouse a legal right to their life insurance policy’s proceeds, regardless of a prenuptial agreement.

Another burgeoning industry in the United States is the life insurance industry. According to Prudential, life insurance is “one of the largest sources of capital in the nation, with $ 4.5 trillion invested in the U.S. economy.” ⁷ In total, life insurance premiums alone accounted for 3.8% of U.S. GDP in 2009. ⁸ Not only does the life insurance industry have a significant impact on the U.S. macro economy, but about “70% of U.S. households depend on life insurance industry products to protect their financial and retirement security.” ⁹ Americans rely on the $ 59 billion in yearly death benefits paid …