Life Insurance Entitlement: What You Need To Know

When a marriage or common-law relationship comes to an end, many people assume that a separation agreement or equalization payment resolves all outstanding issues. However, this is not always true, and certain complications can resurface after one party passes away. If the deceased party has life insurance, this can amplify already existing contention.

Life insurance policies are easily misunderstood, especially when they coincide with estate planning. Family members may believe that wills, separation agreements, or other legal documents drafted prior to the individual's death will dictate who inherits the proceeds from the life insurance policy. Importantly, though, this is not necessarily true, and in fact, this is only true in a minority of situations.