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Most people don’t want to insure their lives to the possible financial benefit of a former spouse. However, often the law requires that parties create a financial backstop to their long-term obligations, whether alimony, child support, or even property held in one party’s name for a length of time before it will be distributed.
Most often, that financial backstop will be a life insurance policy, owned by the insured, with a death benefit naming a former spouse or children for a designated sum. But that is not universally so. Some people choose to retain or create an insurance policy for the benefit of a former spouse, post-divorce, that has nothing to do with alimony, child support, or property distribution.
Assume that while a couple is married they purchase a life insurance policy on husband’s life and they name the wife the owner and beneficiary of the policy. Assume further the parties later divorce and that neither party has an alimony obligation to the other. Is there anything wrong with this picture?

When things are going well in a marriage, many spouses yield to the impulse to financially share everything under the sun. Financially, this may mean pooling all assets into common bank accounts and sharing and accessing those funds randomly. While some may feel such an approach “strengthens the bond” between a husband and wife during marriage, it can actually prove disastrous if the marriage begins to crumble and marital assets need to be inventoried, valued, and equitably divided. This is especially true when it comes to assets that only one spouse inherited.