To guarantee alimony and child support is paid at the death of the person making the payments – the payer would carry life insurance equal to the unpaid balance, and the policy would be owned by and payable to the surviving ex-spouse, the recipient – no problems. But what about continuing alimony and child support payments if the payer should become disabled?
While some people in white collar and professional/technical jobs may have disability income insurance through work or carry personal disability income insurance, it only insures a portion of their income, typically 40% to 60%.
So, it ranges from difficult to impossible for the payer to pay his/her own bills, let alone continue the same amount of alimony and/or child support, if suffering a long term disability. This is a “best case scenario,” as many people don’t have any disability income coverage, other than Social Security. Unfortunately, even the “best case scenario” creates substantial financial hardships for both parties.
Now there is a solution!
CPS offers a proprietary Disability Program, which makes alimony and child support payments to the recipient, if the payer is totally disabled.
- The policy is owned by the recipient, and the recipient is the beneficiary of the benefits.
- The benefit payments are equal to the total alimony, child support, and any other payments (i.e. private school tuition, medical insurance premiums, college tuition) dictated by the divorce decree.
- The policy can be written to pay a monthly benefit for a maximum of 5 years (2, 3 and 4 year monthly payment plans are also available). If the total obligation to pay extends beyond the monthly payment period, a lump sum benefit equal to the unpaid balance of the payments is payable to the recipient.
- The benefit amounts are not limited like traditional disability insurance benefits. If the payer’s monthly obligation is $100,000 a month for 10 years, the policy can be written to pay $100,000 a month for 5 years with a lump sum payment for the balance owed, in this example $6,000,000.
- As the payer makes monthly payments to the recipient, the total obligation of the payer is reduced. Therefore, the disability policy should have a reducing benefit mirroring the reduction in The Payers overall obligation. The policy is not designed to reduce benefits every month, so the adjustment is made once a year.
- This program is available for Executives, White Collar Business Owners, White Collar Professionals/Technical, most all Medical and Nonmedical Professionals, up to $1,000,000 of total coverage Modified Guaranteed Issue (MGI). No Exam, Blood, or Specimen. 5 questions answered correctly and the policy is issued.
Please contact your Disability Income Sales Rep today for more information.