In a recent celebrity headline, Amber Heard filed for divorce from husband Johnny Depp and has allegedly laid out her claim for US$50,000.00 per month in spousal support, made up of expenses, rent, gifts and general lavish lifestyle. Whilst this is an exceptionally unique sum; many divorcees rely on their ex-partners for spousal support to help pay their household bills, mortgage payments, child care costs etc.
But, what would happen to Amber if Johnny was to become ill or pass away?
As an Independent Financial Adviser I am often asked what happens if the person they rely on financially becomes ill or dies. Of course this is something that none of us want to think about, and indeed very few plan for.
In divorce, a consent order setting out the division of legal assets and payment of maintenance is legally binding but it cannot guarantee that maintenance payments be kept up should the ex-spouse be unable to sustain the payments. In this instance, the claimant could go to court to try an enforce payment, however with further legal proceedings, this could be costly.
Life and sickness insurance can be set up to ensure that if the ex-partner passed away or falls ill then the maintenance payments can continue to be paid. This can even be set up as part of the settlement agreement or included in the amount required for monthly outgoings so the premiums for such cover can be accounted for in the monthly spousal maintenance payments.
You may have an existing Joint Life and/ or Critical Illness Insurance policy. Often these are cancelled without thought, as one party ends up paying the premiums on the life of another, but it actually makes sense to keep this in place, especially if you have children. There are sometimes options to split the policies to benefit both parties so it is worth seeking advice to explore these options before making any rash decision.
One common policy that is often over looked is Income Protection. According to The Chartered Institute of Insurance (CII) one million people a year find themselves unable to work due to serious illness or accident. Swiss Re in 2012 found that the UK was uninsured by £190 billion. Income Protection becomes even more vital when your household becomes dependent on one salary. Many employers will only pay a few weeks sick pay, and with the average claim lasting for four years there is a considerable amount of those who are hugely under-insured and could lose their homes as a result of illness or death.
If you are divorced or currently going through a separation, it is important to seek Independent Financial Advice to ensure your insurance policies are reviewed and you are protected. Whereas we would all love US$50,000.00 income per month many of us have much less and if it was lost would have significant financial issues to face.