§4.15 Term Insurance

There is a split in authority regarding the divisibility of term life insurance. One court holds that term life insurance on an insurable spouse is community property only for the period beyond the date of separation for which community funds are used to pay the premium. If the insured dies during that period the proceeds of the policy are fully community. Otherwise, if the insured remains insurable, a term policy does not constitute a divisible community asset because the policy is of no value after its expiration and the community has fully received what it bargained for. [Estate of Logan (1987) 191 CA3d 319, 325–326.]

Another court holds that term life insurance is a divisible asset. To properly determine the value of a term life insurance policy, the court should examine several factors, such as the following [Marriage of Gonzalez (1985) 168 CA3d 1021, 1026]:

• The face value of the policy;
• The amount of the premium;
• The life expectancy of the insured;
• Whether the policy is convertible to whole life insurance;
• Replacement cost; and
• When, if ever, the policy "vests" and is deemed fully paid.