Yes. In Ontario, a court can order a spouse who has a life insurance policy to designate the other spouse or a child as the beneficiary irrevocably, to secure support (Family Law Act, s. 34(1)(i)), and the Divorce Act allows a court to order a spouse to "secure or pay" spousal support (s. 15.2(1)) and to attach terms and conditions to a child support order (s. 15.1(4)). Separation agreements commonly include the same kind of term. An irrevocable designation, properly filed with the insurer, cannot be changed without the beneficiary's consent (Insurance Act, s. 191(1)).
How life insurance is used to secure support, step by step
Support usually runs for years, as our child and spousal support page explains. If the paying spouse dies, the payments may stop just when the family needs them most. Life insurance is a common way to protect against that risk.
- Work out what needs protecting. Estimate how much support remains: child support until each child is likely to stop being a dependant, and spousal support for its expected duration. Our pages on how child support is calculated and how long spousal support lasts help with both numbers.
- Check existing coverage. Group insurance through work, individual term or permanent policies, and any coverage attached to a mortgage. Each has a face amount and a beneficiary designation that may need to change.
- Agree on or ask for the right order. Under the Family Law Act, the court can require a spouse who has a policy to designate the other spouse or a child as beneficiary irrevocably (s. 34(1)(i)), require a spouse with a pension or other benefit plan to designate the other spouse or a child as beneficiary and not change it (s. 34(1)(j)), and require the securing of payment by a charge on property or otherwise (s. 34(1)(k)).
- Make the designation effective. An irrevocable designation must be made in the contract or in a declaration, other than one in a will, filed with the insurer at its head or principal office in Canada during the insured's lifetime (Insurance Act, s. 191(1)). A designation in a will, or a declaration not filed that way, is treated as revocable (s. 191(2)).
- Get proof. Ask the insurer for written confirmation of the irrevocable designation and the current face amount, and keep it with the agreement or order.
- Build in updates. A good agreement says when coverage can be reduced as the support obligation shrinks, and requires proof of coverage on request.
Ways support can be protected if the payor dies
| Tool | How it works | Source |
|---|---|---|
| Irrevocable life insurance designation | Insurance money goes to the named spouse or child; the insured cannot change it without consent | Family Law Act, s. 34(1)(i); Insurance Act, s. 191(1) |
| Pension or benefit plan designation | Spouse or child named as beneficiary and the designation cannot be changed | Family Law Act, s. 34(1)(j) |
| Charge on property or other security | Support secured against property | Family Law Act, s. 34(1)(k); Divorce Act, s. 15.2(1) |
| Order binds the estate | A Family Law Act support order binds the payor's estate unless it says otherwise | Family Law Act, s. 34(4) |
| Dependant's support claim against the estate | A dependant the deceased was supporting, or legally obliged to support, can apply if adequate provision was not made | Succession Law Reform Act, ss. 57 and 58 |
What changes the answer
- Which court. The Ontario Court of Justice cannot make orders under s. 34(1)(i), (j) or (k) except for the provision of necessities or to prevent the dependant from becoming or continuing to be a public charge (Family Law Act, s. 34(2)). Insurance and security orders are usually made in the Superior Court of Justice, which in Toronto hears family property and divorce cases, as our Toronto family court guide explains.
- Whether a policy exists. The wording of s. 34(1)(i) refers to "a spouse who has a policy of life insurance". New coverage is usually arranged by agreement, or through the broader power to secure payment "by a charge on property or otherwise" (s. 34(1)(k)).
- Insurability and cost. Age and health affect whether coverage can be obtained and at what price. Those facts matter to what is reasonable.
- The amount of support remaining. Coverage is often matched to the support likely still to be paid, and reduced over time as the obligation declines.
- Child support versus spousal support. Both can be secured under the Family Law Act (s. 34(1)). Under the Divorce Act, a spousal support order can require a spouse to "secure or pay" (s. 15.2(1)), and a child support order can carry terms and conditions the court thinks fit and just (s. 15.1(4)).
- Estate claims. If there is no insurance, a dependant may apply against the estate under Part V of the Succession Law Reform Act, generally within six months of the grant of probate or administration (s. 61(1)). Insurance avoids that fight.
How insurance fits with the rest of the settlement
Insurance is one part of a support package, not a separate deal. The amount usually tracks the support that is likely to remain, so it should be revisited when support changes: when a child finishes school, as our page on child support after 18 explains, or when spousal support is varied or ends. Where spousal support is paid as a single amount instead of monthly, there may be little left to insure; our page on lump sum spousal support compares the two. Insurance also sits beside the property rules that apply on death. If a married spouse dies before the property case is settled, the survivor may have an equalization election, which our page on death and equalization covers. Under the Family Law Act, the powers in s. 34(1), including securing payment, are available on an interim or final order; our page on interim support describes temporary orders.
A worked example
For example, imagine Sofia and Raj separate. This is a hypothetical with simplified numbers. Raj will pay child support of $1,600 a month for their two children, aged 9 and 12, and spousal support of $1,200 a month, expected to last about eight years.
- Child support at risk: if both children are supported until about age 18, that is roughly 9 years and 6 years of support, which at an even split of the $1,600 is about $800 x 108 months + $800 x 72 months = $144,000.
- Spousal support at risk: $1,200 x 96 months = $115,200.
- Total: about $259,000 before any adjustment for time value or tax.
Raj has $400,000 of group insurance through work. The agreement requires him to keep at least $260,000 designated irrevocably for Sofia in trust for the children and for herself, reducing every two years in line with a schedule, to provide written proof each year, and to replace coverage if he changes jobs. The figures are invented, and support amounts change over time with income.
Common mistakes with life insurance for support
- Relying on a revocable designation. A beneficiary designation that is not irrevocable can be changed by the insured.
- Making the designation in a will. An irrevocable designation in a will is treated as revocable (Insurance Act, s. 191(2)).
- Forgetting group coverage ends with the job. Agreements should require replacement coverage if employment ends.
- No reduction schedule. Without one, a payor may carry more coverage than the remaining obligation, or a recipient may be left with too little later.
- No proof of coverage. Require annual written confirmation from the insurer.
- Naming young children directly. Money for minors can need a trustee; ask about naming a trustee in the designation.
What to do this week
- List every life insurance policy, including group coverage at work, with face amounts and current beneficiaries.
- Estimate the remaining child and spousal support obligations.
- Ask the insurer what form it needs for an irrevocable designation.
- If you are the payor, check your insurability and the cost of term coverage.
- Make sure the agreement or order covers proof of coverage and what happens if a policy lapses.
- Book a free consultation to fit insurance into the support terms of your agreement.
Frequently asked questions
Can I be forced to buy new life insurance?
Section 34(1)(i) applies to "a spouse who has a policy". New coverage is usually agreed, or addressed through the power to order support secured "by a charge on property or otherwise" (s. 34(1)(k)). The court looks at the circumstances, including cost and insurability.
Does support stop automatically if the payor dies?
A Family Law Act support order binds the estate unless it says otherwise (s. 34(4)). Collecting from an estate can be slow and uncertain, which is why insurance is often preferred.
Who should be the beneficiary: me or the children?
Either is possible under s. 34(1)(i). Minor children usually need a trustee, so many agreements name the other parent as beneficiary in trust, or name a trustee.
Can the coverage be reduced over time?
Yes, if the agreement or order provides for it. Matching coverage to the remaining obligation is common.
Is life insurance taxed?
For property purposes, proceeds of a life insurance policy payable on death are excluded from net family property (Family Law Act, s. 4(2), para. 4). Ask a tax professional about any tax questions on the policy itself.
What if my former spouse lets the policy lapse?
Breach of a court order can be enforced, and the court has broad powers when a party fails to obey an order (Family Law Rules, r. 1(8)). An agreement should require proof of coverage so a lapse is caught early. Our page on unpaid support covers enforcement.