The Use of Whole Life Cash Value in Divorce Settlements and Property Division

In divorce proceedings, a Whole Life insurance policy is considered a marital asset due to its guaranteed Cash Value component. The policy’s value must often be accounted for and divided like any other investment or savings account.

Valuing the Policy

The policy’s value for the purpose of division is typically based on the **Cash Surrender Value (CSV)**—the amount the policy owner would receive if they liquidated the policy today. Unlike retirement accounts, the CSV is immediately liquid.

Division Strategies

The policy can be divided in several ways:

• **Cash Buyout:** One spouse retains ownership of the policy and pays the other spouse a cash amount equal to half of the CSV.
• **Policy Split/Assignment:** The policy may be legally split (if the insurer allows) or entirely assigned to one spouse, with an equivalent value of other marital assets (e.g., retirement funds) going to the other spouse.
• **Beneficiary Change:** If the policy is retained, the court often requires the retaining spouse to maintain the former spouse as an irrevocable beneficiary to guarantee alimony or child support payments.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. Divorce settlements involving life insurance must be overseen by a qualified family law attorney and a financial analyst.