Why is it essential to update child insurance policies after a divorce? Here are 6 key reasons

livemint.com:

divorce rates in the world, currently estimated at around 1.1%, India has seen a steady increase in divorce cases in recent years. This trend is attributed to the growing complexities of modern life, as noted in a report by the United Nations.Divorce is a challenging journey, especially when children are involved.

Amidst the emotional and logistical whirlwind, it is quite common to overlook some of the important aspects and one of which is the insurance policies. Yet, reviewing and updating the child’s insurance policies post the couple’s divorce is highly significant.Here are some of the key reasons why:Significant financial changes: With separate households post-marriage, the income dynamics shift drastically.

This too can considerably affect the ability to pay premiums and maintain the policy coverage. Hence, reviewing the existing policies ensures adequacy in coverage levels.

This would also prevent any gaps that could leave children vulnerable in unforeseen circumstances.Pivotal role in custody arrangements: One of the parents who holds custody may influence who should be the policyholder and who should be the beneficiaries. For instance, if one of the parents is the custodian, they might need to be the policyholder to manage the funds responsibly for the child’s benefit.Updating beneficiaries is crucial: It has been observed that in many cases, spouses designate each other as beneficiaries.

However, post-divorce, such arrangements may not align with the new family structure or intentions. Therefore, it’s imperative to designate beneficiaries accordingly, ensuring that funds are directed as intended, especially for the welfare of the children.Division of assets: Divorce often involves the division of assets; this