Research from L&G has revealed that many people are forgetting to update key financial information following a divorce, which could have serious implications for their families’ financial futures.
One in ten people who have divorced (over 815,000 - 10%1) have forgotten to remove their former spouse as the beneficiary of their life insurance policy meaning, if a claim was made, their ex would receive the payout. Meanwhile, only 7% of people who had divorced discussed life insurance beneficiaries as part of their separation and just 27% have cancelled a joint life insurance policy they had when they were married. 6% of people waived the right to their joint life insurance policy during the divorce process.
Just 7% of people will consult a financial adviser as part of their divorce, leaving many vulnerable to financial errors which could have long-term consequences. 11% of divorcees, for instance, have either delayed or forgotten to remove their ex-partner from their will, running the risk that their ex could inherit their estate. Once separated, many divorcees do not prioritise protection insurance with only 4% of people taking out a critical illness policy and just 3% taking out income protection.
James Shattock, Managing Director, UK Protection, L&G: “Divorce is always difficult but, without advice, it can be a costly too. It’s really important for anyone going through a separation to be fully aware of the financial implications of divorce and to ensure they review other important elements, like their wills and financial products like life insurance, to ensure beneficiary information is updated. Advisers can play a key role in supporting clients during a separation, helping them to put a plan in place for the costs associated with a divorce, any shared debts and, potentially, making sure a Clean Break Order is in place. We’ve also produced a financial health check tool to help people consider the wider financial implications of a separation.”
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