During divorce, which statement best describes the treatment of the cash value of a community property life insurance policy?

• A. It is typically excluded from division.
• B. It is often subject to division between the parties.
• C. It must be divided only by court order.
• D. It is automatically assigned to the insurer.

Answer: (B)

In a divorce, assets accumulated during the marriage are treated as marital property and are generally subject to division. A life insurance policy that is part of the community property estate includes a cash value that has built up over time. This cash value is an asset of the marital estate, so it is typically subject to division between the spouses, rather than staying with one party or automatically going to the insurer. The death benefit itself isn’t usually divided, but the cash value in the policy is. While settlements or court orders can allocate it, it isn’t restricted to be divided only by court order, making the description that it is often subject to division the best fit.