Term Life Insurance Proceeds: Community or Separate Property?

  Are the proceeds of a term life policy community property or separate property of the spouse who pays the final premium?  Recognizing a split of authority, the Fifth Appellate District held in Marriage of Burwell that the characterization of term life insurance proceeds depends on multiple factors, including whether the policy contains certain contractual provisions, the insurability of the insured spouse, and on the characterization of the funds which paid the premium for the final term of the policy.  

  The proceeds are entirely community when the final premium is paid solely with community property. “The proceeds are entirely separate property when:  (1) a separate estate has paid the final premium with separate funds; and (2) the insured spouse was insurable at the end of the last term paid for by community funds; and (3) either (a) the insured spouse’s health was such that he or she could have purchased a comparable policy at a comparable price when the separate estate began paying the premiums, or (b) the policy did not contain a premium cap when the separate estate began paying the premiums.  The proceeds are part community and part separate where (1) the separate estate has paid the final premium with funds that are part community and part separate; or (2) the insured spouse has become medically uninsurable before he or she began paying the premiums with separate property; or (3) the insured spouse could not have purchased a comparable policy at a comparable price when he or she began paying the premiums with separate property.”


  Michael Daymude consults with clients and accepts cases involving disputes concerning life insurance proceeds, including those where the characterization between premiums paid with community versus separate funds is important to resolution. For other types of cases accepted, please scroll the Home and My Practice pages. If you are seeking a legal consultation or representation, call Michael at 818.971.9409.

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