Wisconsin Divorce Laws: Division of Life Insurance Policies

Divorce is undoubtedly a challenging time for all parties involved, and matters become even more complex when it comes to dividing assets. Among these assets, life insurance policies hold significant financial value, depending on the type and amount of coverage they provide.

A Closer Look at Life Insurance Policies in Divorce

Generally purchased to offer financial protection in the event of death, life insurance policies can also yield financial benefits through their cash value. This is particularly true for whole life insurance policies, which accumulate cash over time.

Within divorce proceedings, life insurance policies can become part of the assets subject to division. In Wisconsin, an equitable distribution state, if the parties cannot agree on how to split their assets, the court will ensure a fair and equitable division.

Understanding Different Types of Life Insurance Policies

Wisconsin recognizes two primary types of life insurance policies: term life insurance and permanent life insurance.

Term Life Insurance

Term life insurance policies provide coverage for a specific duration, generally ranging from one to thirty years. These policies do not accumulate cash value and solely exist to provide death benefits. It’s worth noting that in divorce cases, term life insurance policies may hold less value, and their coverage might cease upon the finalization of the divorce.

Permanent Life Insurance

Unlike term policies, permanent life insurance policies offer lifelong coverage and accrue cash value over time. The two most common forms of permanent life insurance in Wisconsin are whole life insurance and universal life insurance. Divorce cases involving these types of policies can present considerable value and necessitate specific negotiations for equitable division.

Approaches to Dividing Life Insurance Policies in Divorce

When it comes to the division of life insurance policies, Wisconsin courts typically follow these approaches:

Divorce Settlement Agreement

Parties have the option to reach an agreement on how to divide their life insurance policies through a divorce settlement agreement. This may involve one party assuming ownership of the policy, selling the policy and sharing the proceeds, or maintaining the policy with benefits shared between the parties.

Court-Ordered Division

If mutual agreement cannot be reached, the court has the authority to order the division of life insurance policies. In such cases, the court considers various factors, including:

  • The policy’s value
  • Responsibility for premium payments
  • The purpose behind purchasing the policy
  • Policy ownership
  • Beneficiary designation

The court may order the transfer of ownership, liquidation of the policy’s cash value, or division of the death benefits.

Child Support or Alimony

Life insurance policies can also serve as a means to secure child support or alimony payments. Wisconsin courts can order one party to maintain a life insurance policy for the benefit of their children or ex-spouse. In the event of the policyholder’s death, the policy proceeds can be utilized to provide financial support.


Divorce proceedings, especially when it involves dividing assets such as life insurance policies, can be intricate. Understanding the different policy types and their respective valuation and division processes based on Wisconsin’s equitable distribution approach is crucial. Seeking legal advice is always recommended to ensure that your rights and interests are adequately protected when making decisions regarding life insurance policies.

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