For many recipients of spousal and child support, often just as important as their support orders is the condition that the payor obtain or maintain life insurance, listing the spouse as his or her beneficiary. Hi. I’m Nadia Warsi – an associate lawyer at the Feldstein Family Law Group. Today, I will be offering you some basic facts on life insurance provisions as they relate to support in the family law world.
The obligation on a payor spouse to provide spousal or child support to his or her dependents is one that the law takes very seriously. Whether in a separation agreement or as ordered by the court, the inclusion of a life insurance clause is a necessary security measure to ensure that the payor’s dependents, to whom spousal and child support is owed, are not left financially destitute in the event of the payor’s untimely death.
In fact, courts are given broad authority under family law statutes to not only order that a payor spouse maintain his or her life insurance with the recipient as beneficiary, but also to direct a payor spouse to obtain such insurance if he or she does not already have it, to secure the recipient’s source of support. This is a critical point. Not only are payors responsible for providing monthly support, but they will also have the added expense of monthly life insurance premiums, which can become quite expensive depending on the type of insurance policy obtained. One way to keep these premiums minimal is to negotiate purchasing a fixed term policy that spans for just the duration spousal support is owed. Another way is consulting with your lawyer to determine what the appropriate face value amount should be, and trying to negotiate and agree upon a figure that is just sufficient to cover that amount. It also may be a good idea to speak to your insurance agent about your different life insurance options.
Lastly, if drafting a separation agreement, you must be very careful about the wording of life insurance clauses and even more aware of the consequences flowing from it. Reason being that if either party commences a court action for enforcement of the terms of their agreement, the court’s role will simply be to give effect to the parties’ intentions when having drafted that agreement, assuming, of course, that it is a valid agreement. So, courts will infer from the wording of the agreement what the parties intended, and make rulings on that basis, despite the fact that the result may be one the court would not have ordered on its own accord. The cautionary tale illustrating this is a 2009 Ontario Court of Appeal case. In it, the wording of the separation agreement stated that the payor husband was to maintain life insurance of $100,000.00 with the recipient spouse as beneficiary. According to the agreement, support was to be paid until the recipient wife turned a certain age and the $100,000.00 insurance was also to be maintained until such age. The husband made regular support payments and maintained the life insurance, but at a lesser amount. Upon his death, the recipient wife was a few years shy of reaching her support cut-off date. However, due to the ambiguity of the wording in the agreement, whereby it was not specified that the life insurance was security for spousal support, the court allowed the wife to receive the full $100,000.00 from his estate, despite the fact it well exceeded the value of his outstanding spousal support obligation.
For more information on spousal support or separation agreements, please visit our website at www.separation.ca. If you would like advice on your own family law matter, you can schedule a consultation by calling 905-415-1636. From Feldstein Family Law Group, I’m Nadia Warsi. Thanks for watching.