Divorcing spouses should beware of life insurance policies with outstanding loans

08/8/2013 | Tom Tillery blog

Columnist Tom Tillery writes about a divorced woman who had received a life insurance policy in a property settlement. Her spouse had borrowed against the policy and later stopped making premium payments. Tillery warns that life policies with automatic premium-payment options can result in a loan that exceeds cash values and a taxable gain for the unwary beneficiary. The takeaway: Don't accept an insurance contract with a loan against the policy as part of a property settlement.

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