How Are Life Insurance Policies with Cash Value Divided in an Ohio Divorce?

When people think about dividing assets in a divorce, they usually focus on houses, bank accounts, and retirement plans. But one asset that is often overlooked—and can be very valuable—is life insurance with cash value.

In Ohio (including Columbus and Franklin County), life insurance policies that build cash value are treated as marital property if paid for during the marriage. That means they must be addressed in your property division just

like any other account. At Hoffman Law, we make sure our clients understand how this works so they don’t leave money on the table.

Step 1: What Type of Life Insurance Do You Have?

Term Life Insurance

• No cash value—just a death benefit.

• Usually not divided as property.

• However, the court may still require a spouse to keep the policy to secure child or spousal support.

Whole / Universal / Variable Life Insurance

• Builds cash surrender value over time.

• This cash value is considered property and must be divided.

Step 2: Is the Cash Value Marital or Separate?

Ohio law looks at when and how premiums were paid.

• Premiums paid during the marriage with marital funds = marital property.

• Premiums or value from before marriage, inheritance, or separate funds = separate property.

• If both apply, we may need tracing to break it down.

At Hoffman Law, we regularly trace and separate marital vs. non-marital value on behalf of our clients.

Step 3: How Is the Policy Valued?

The value is typically the cash surrender value, which can be obtained from the insurance company.

We look at:

• Current cash value

• Outstanding loans

• Surrender charges

This gives the true net value to divide.

Step 4: How Do Courts Divide the Cash Value?

There are a few common methods used in Columbus divorce cases:

Option 1: One spouse keeps the policy and pays the other their share

Most common and simplest.

Option 2: Surrender the policy and split the cash

Option 3: Offset with other assets

(Example: One spouse keeps the policy, the other gets more from a bank or retirement account.)

Option 4: Split the policy itself (rare)

Step 5: What If There Were Loans or Withdrawals?

If one spouse borrowed against the cash value during the marriage:

• The loan reduces the policy’s value, OR

• The other spouse may receive a credit if the money was used for non-marital purposes.

Bottom Line

If your life insurance policy has cash value, it is a marital asset that must be addressed in your divorce. Ignoring it can lead to an unfair outcome—or even open the door for future litigation.

Hoffman Law Can Help Protect Your Financial Future

We regularly handle complex financial issues in divorce, including:

• Cash value life insurance

• Retirement plans and QDROs

• Real estate division

• Business and investment interests

• Spousal support and child support

Whether you’re just starting the process or already in negotiations, we can help you protect what you’ve earned.

Call Hoffman Law today to schedule a consultation. (614) 222-0526.. Columbus, Ohio