- On a support application, a court may order a spouse with a life insurance policy to designate the other spouse or a child as irrevocable beneficiary.
- The purpose of such an order is to secure the support obligation if the payor dies.
- A beneficiary designation makes a pool of money available but does not create a true security interest.
- The order does not automatically take the whole policy out of the estate's reach.
If you receive child support, you may worry about what happens to your family if the payor dies. Life insurance is one tool courts have used to address that concern.
This article explains in plain language how Ontario courts can deal with insurance and support, what a beneficiary order does, and what questions remain for a lawyer to answer. Every case turns on its own order, policy and facts.
What the court can order
Under section 34(1)(i) of the Family Law Act, on a support application a court may order a spouse who has a life insurance policy to designate the other spouse or a child as beneficiary irrevocably. The Ontario Court of Appeal says case law treats the purpose of such an order as securing the support obligation if the payor dies.
The Court of Appeal also noted that section 34(1)(k), which allows securing payment by a charge on property or otherwise, is broad enough to require a payor to maintain insurance for a beneficiary. Whether a court will order a new policy or only a designation on an existing one can depend on the power used and the facts, so ask a lawyer.
For child support under the Divorce Act, a court making a child support order may fix the period and impose terms, conditions or restrictions with the order. Whether those terms can include insurance in your case is a question to confirm with a lawyer.
What an irrevocable beneficiary order does
If a court order requires the payor to name the recipient as irrevocable beneficiary, she is entitled to the policy proceeds to the extent of the support obligations, past and future, existing at the payor's death.
If the obligations are less than the proceeds, the balance is available to the net estate to satisfy other dependants' claims under Part V of the Succession Law Reform Act. In other words, the order is aimed at the support obligation, not at handing over the entire policy.
| Question | General answer |
|---|---|
| Is the beneficiary designation true security? | The Court of Appeal described it as making available a pool of money, not a true security interest. |
| Does the recipient get the whole policy? | Only to the extent of the support obligations, past and future, at death. |
| Can leftover proceeds reach others? | The balance is available to the net estate for other dependants' claims. |
Where trusts fit in
When the beneficiary is a child, especially a young one, people often ask whether the money should be held in trust. A trust is a legal arrangement where someone manages money for another person. Whether a trust is appropriate, how it would be set up and who would manage it are questions that depend on your facts and are best discussed with a lawyer.
If you negotiate a separation agreement, the insurance terms (amount, who is named, how long the cover lasts and proof that premiums are paid) are worth spelling out clearly.
Points to raise when negotiating or applying
- Whether the order or agreement requires an irrevocable designation.
- The amount of cover compared with expected support, bearing in mind that entitlement is limited to the support obligations at death.
- How long the cover should last, which links to how long support is expected to continue.
- How you will confirm that the policy stays in force and the designation remains in place.
- Whether other dependants could claim against any balance.
What to do next
- Review your current order or agreement for any insurance or security terms.
- Ask for proof of the policy, including the insurer, the owner and the named beneficiary.
- Write down the support amount, the expected duration and any special expenses.
- Speak to a family lawyer about whether to seek a designation, an order to maintain insurance, or other security.
- Keep copies of all policy documents and correspondence.
Frequently asked questions
Can a court force my ex to name me or our child as beneficiary?
On a support application, a court may order a spouse who has a life insurance policy to designate the other spouse or a child as beneficiary irrevocably. Whether it makes the order depends on the facts.
Will I get the whole policy if I am the named beneficiary under a court order?
Not necessarily. The entitlement is to the proceeds to the extent of the support obligations, past and future, existing at death, and any balance is available to the net estate.
Is a beneficiary order the same as security on property?
No. The Court of Appeal said such an order makes available a pool of money rather than creating a true security interest. Another power, section 34(1)(k), allows securing payment by a charge on property or otherwise.
Can a court require the payor to keep paying premiums?
The Court of Appeal noted that section 34(1)(k) is broad enough to require a payor to maintain insurance for a beneficiary. Whether that applies to you depends on your facts, so check with a lawyer.
Sources
- Ontario Court of Appeal: Dagg v. Cameron Estate, 2017 ONCA 366 — ontariocourts.ca
- Divorce Act, s. 15.1 (Justice Laws) — Justice Laws (federal)
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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