Life Insurance to Secure Spousal Support Payments in Ontario

If you receive spousal support, the payor's death can feel like a cliff edge. The monthly payment you plan your life around may be tied to one person's income and health. It is natural to ask whether life insurance can act as a safety net.

This article explains what the law in Ontario says about the tools a court has, the claims that can be made against an estate, and the options people often discuss when they want support to be more secure. It does not replace advice on your own order or agreement.

Why the payor's death is a real concern

Spousal support is usually paid out of the payor's ongoing income. When the payor dies, that income stops. Whether support continues, and from what source, depends on the wording of your order or agreement and on the law that applies. Insurance is one way people try to replace the lost income, but it only helps if it is properly set up and kept in place.

This is a point where small details in your paperwork matter a great deal. A general idea of the options will help you ask better questions of a lawyer.

What a court can order

Under the Divorce Act, a court can order one spouse to pay the other a lump sum, periodic sums, or both. The order can be for a definite period, an indefinite period, or until a specified event happens.

The court may also attach any terms, conditions or restrictions it thinks fit and just. That wide power is the starting point for discussions about security. Whether a particular term, such as a requirement to keep insurance in place, is available in your case depends on the statute that applies to you and on your facts, so it is worth confirming with a lawyer.

Couples do not have to go to court. In Ontario, they can agree on support in a separation agreement, or have a judge decide. If you are negotiating, security for the payments can be raised as part of that discussion.

Claims against the estate

Separate from any insurance, Ontario recognizes that someone who depended on the deceased can claim against the estate for support. The details, including who qualifies and how long you have, should be checked with a lawyer as soon as possible after a death.

If you were married, there is another distinct step. A surviving spouse who wants an equalization payment must file and mail an Election of Surviving Spouse no later than six months after the spouse's death. Equalization is about dividing property and is separate from support.

Common-law partners are in a different position on property. They may claim spousal support, but they are not legally required to split property acquired while living together, and property generally belongs to whoever bought it.

Other ways people try to make support more secure

• A lump sum instead of ongoing payments. Lump-sum support is not limited to very unusual cases, but the payor must have assets or resources to pay.
• Tax planning on any lump sum. When periodic support is converted to a lump sum, the amount should be discounted for tax, because a lump sum is neither taxable to the recipient nor deductible by the payor.
• Registering your order or agreement for collection. A court order is automatically filed with the Family Responsibility Office, but a separation agreement must be filed with a court and then registered before the Office can enforce it.

Keep in mind that the Family Responsibility Office collects payments from the payor and does not pay when a payor misses a payment. It is a collection tool, not a guarantee of payment.

What to do next

• Reread your order or separation agreement for any wording about death, insurance or the estate.
• Find out whether your agreement is registered with the Family Responsibility Office if you want it enforced.
• List what you know about the payor's assets and any existing coverage, without contacting insurers on the payor's behalf.
• Ask a family lawyer whether security can be added or negotiated in your situation.

Frequently asked questions