Colorado couples who are contemplating divorce often have many questions about property division and asset distribution. However, few of those thinking about a divorce consider one important part of the marital assets: life insurance policies. Dividing insurance policies can be difficult and time-consuming and may end up hurting both parties financially if the division is not done carefully.
Life insurance is purchased so that cash may be obtained in the future. Because of this, it is different from a home or other investments. There is usually no current value in a life insurance policy because it is designed to pay out on the death of the owner. Term policies in particular have very little cash value until the end of the policy, and even then the amount may be so small as to scarcely warrant consideration in property division. However, the proceeds of a life insurance policy may be very large and a divorcing spouse may be concerned that the owner of the policy will change the beneficiary and the proceeds will go elsewhere.