Insights

Is insurance in Ningbo a common property during the insurance period?

Ningbo Author：LuXu WANG

When dividing marital property in a divorce, an insurance policy that is still in force often becomes a focal point of contention: one party argues that the policy has a personal nature and therefore cannot be divided, while the other contends that since the premiums were paid with marital assets, it should be subject to division. The conclusion first says: whether the insurance policy can be divided depends on the source of the premium and whether the insurance policy has cash value-the cash value of the insurance policy insured with the joint property of the husband and wife belongs to the joint property of the husband and wife and can be divided during divorce. However, insurance claims of the nature of personal injury compensation and education funds for children are usually not involved in the division. First categorize the types of policies, then address the division—this is the correct sequence for resolving policy-related disputes.

1. Three main threads of legal qualification

The first main thread is the scope of jointly owned property. Article 1062 of the Civil Code stipulates that wages, bonuses, remuneration for labor services, income from production, operation and investment, etc. earned during the marriage relationship are the joint property of the husband and wife-the policy benefits formed by the payment of premiums on the joint income of the husband and wife, which belong to the category of "investment" and income and can be included in the examination of common property.

The second main line is the exception for personal property. Article 1063 of the Civil Code stipulates that the compensation or compensation obtained by one party due to personal injury is personal property-serious illness insurance, accident insurance, medical insurance and other claims obtained due to personal injury or illness. It has personal exclusive attributes and belongs to the personal property of the insured, and is not divided at the time of divorce; if a claim has occurred and the claim is paid to the insured or beneficiary, it generally belongs to the insured or beneficiary.

The third main thread concerns special arrangements related to personal matters. Article 80 of the (I) of Interpretation of Marriage and Family of the Civil Code stipulates that after marriage, the pension insurance premium is paid with the joint property of the husband and wife, and at the time of divorce, one party claims to divide the actual part of the pension account paid by the individual during the marriage relationship as the joint property of the husband and wife, the people's court shall support it-even if the pension account is the same, commercial insurance policies with cash value are excluded from the division without reason. This rule—“the source of the premium determines ownership”—serves as the fundamental standard applied by the Ningbo courts in handling the division of insurance policies (as evidenced by the Ningbo Intermediate People’s Court’s “Case-Based Legal Explanation” titled “Divorce: How Are the ‘Accounts’ Settled?” which adopts this view).

2. Separate handling of different types of insurance policies

  1. Financial Insurance (Annuity Insurance, Participating Insurance, Universal Life Insurance, Increasing-Value Whole Life Insurance, etc.): If the policy has a cash value or provides survival benefits, the cash value attributable to premiums paid during the marriage constitutes marital property and is subject to division upon divorce. Choose one of two methods for division: First, the parties may agree that one party retains the policy and pays the other party a cash‑out amount equal to the policy’s cash value (the preferred option, as it avoids surrender charges); second, the policy is surrendered, and the cash value is divided (this method incurs losses and should be used with caution).
  2. Protection-type insurance (critical illness insurance, accident insurance, medical insurance): When no claim has been made, the policy’s cash value is relatively low, and there is little dispute; however, once a claim is filed, the claim proceeds are personal in nature and belong to the insured individual. However, if the insurance premiums were paid after marriage using marital joint property, there are differing practices in handling policies that have not been claimed. Typically, the parties may negotiate for the policyholder to compensate the other party either by paying half of the premiums already paid or by providing compensation based on the policy’s cash value.
  3. Educational and annuity insurance policies for children: It is usually regarded as a gift to the children, and the benefits of the policy belong to the children, not divided as the joint property of the husband and wife; if the source of the premium is the joint property, it is generally no longer recoverable, unless otherwise agreed by both parties.
  4. Insurance purchased before marriage with premiums paid after marriage: The portion of premiums paid with pre-marital personal property shall be deemed the individual’s property; premiums paid with marital joint property and any corresponding appreciation shall be treated as marital joint property and, upon division, shall be calculated separately for each period of premium payment.
  5. One party insures a third party or maliciously cancels the policy.: Insure the third party outside the marriage with the joint property of the husband and wife, the other party can claim that the premium expense is invalid and recovered at the time of divorce; in case of malicious surrender or transfer of cash value on the eve of divorce, it can be claimed that it is less divided or not divided according to Article 1092 of the Civil Code.

3. material evidence list and operation steps

The party advocating for the division of the insurance policy is advised to prepare according to the following steps:

  1. Organize your family’s insurance policy list: Gather all insurance contracts, payment records, and information on the policyholder/insured person/beneficiary; record the date of each policy’s inception and the corresponding payment account for each policy.
  2. Distinguish the source of premium: judge whether the premium comes from personal property before marriage or common property after marriage, and get the bank running water of the corresponding period;
  3. Inquire about the cash value of the insurance policy: apply to the counter of the insurance company, the official customer service or the official App to inquire about the cash value table, surrender amount and payment record with the identity information of the policyholder;
  4. Negotiate the division plan: negotiate first that one party continues to hold and compensate the other party to avoid surrender loss, and reach a consensus to write the divorce agreement and indicate the policy number, cash value and payment period;
  5. Apply to the court for an investigation when necessary: If the opposing party conceals the insurance policy, you may, during the litigation, request the court to obtain the insurance records from the insurance company or apply for an investigative order to inquire into the insurance information under their name.

4. Analysis of Common Misconceptions

Myth 1: Insurance is considered personal property and cannot be divided.Correct answer: Compensation for personal injury belongs to the individual; however, investment-linked insurance policies that are paid for with joint property and have a cash value can be subject to division.

Misconception No. 2: Cancellation is the most cost-effective option. Correct answer: Surrendering a policy typically only allows you to reclaim the cash value, which may be significantly lower than the total premiums paid, and your coverage will be terminated. It is preferable for one party to retain the policy and pay the other party an equivalent sum in cash; this approach minimizes losses.

Misunderstanding 3: If the beneficiary is a child, you cannot move.Correct answer: Education and annuity insurance policies purchased for the benefit of children are generally treated as gifts to the children and are not subject to division; however, investment-linked insurance policies purchased for one spouse may still be subject to division, regardless of whether the beneficiary is a child.

Myth 4: If I pay the premium, the insurance policy will belong to me. Positive solution: The source of premium is personal property before marriage or common property after marriage, and the premium paid with common income after marriage, even if it is handled by one party, the cash value is still common property.

5. Calculation basis and implementation procedures for policy splitting

The core of the division of the cash value of the insurance policy is to determine the base date and the proportion of payment: the cash value is generally based on the cash value statement issued by the insurance company at the time of divorce or the time of prosecution; if the insurance before marriage continues to pay after marriage, it is converted in stages according to "the corresponding value of the pre-marital payment period belongs to the individual, and the corresponding value of the post-marital payment period belongs to the common, the formula can be simplified to the common part = cash value x (post-marital payment period ÷ total payment period), which is then adjusted in conjunction with the premium payment voucher. If the two parties dispute the amount, they may apply to the court to obtain a cash value statement from the insurance company or entrust a qualified institution to evaluate it.

There are three ways to operate the landing: first, the holder continues to hold the insurance, pays the discount to the other party and confirms the policy number, discount benchmark and payment period in writing, which involves the simultaneous handling of changing the beneficiary; second, if both parties are unwilling to hold the insurance, the cash value shall be divided through negotiation, and the loss of surrender shall be shared by both parties in proportion; third, if the policyholder does not agree to change and cannot negotiate, by the court judgment discount compensation, after the entry into force of the application for non-payment enforcement. Need to be reminded: the change of policyholders, beneficiaries usually need to be reviewed by the insurance company and obtain the written consent of the relevant parties, before processing to confirm the required materials to the insurance company.

Insurance policy prevention and preservation before and after 6. divorce

The common "small actions" in the insurance policy link should be prevented in advance: firstly, on the eve of divorce, the common property is used to insure large amount of financial insurance, and the funds are "hidden" into the insurance policy. The other party can claim that the insurance is invalid or require to divide the cash value, and can claim that it is less divided or not divided according to Article 1092 of the Civil Code; secondly, before divorce, malicious surrender and cash value, the other party may also claim less or no division and recover the money.

Response measures include: applying to the court to obtain the insurance record from the insurance company (by the investigation order or by the court's letter), checking the insurance, surrender and beneficiary change during the marriage; applying for property preservation at the same time when signs of transfer are found, freezing the cash value of the insurance policy or related accounts; cooperating with the court's property declaration requirements, truthfully filling in the insurance policy information and concealing the adverse consequences that the declaration is verified. In the divorce agreement, it is suggested that the "list of policies under the name + cash value treatment" should be listed as a special clause to avoid the second lawsuit of "only one policy is discovered after divorce.

The connection between the 7. policy and the overall family property arrangement

The policy division is not isolated, it is interlinked with property declaration, debt isolation and inheritance arrangement. First, it is linked to property declaration: some courts in Ningbo (such as Yinzhou Court) implement property declaration in divorce proceedings. Insurance policies, cash value and financial accounts must be truthfully declared. After the concealment of insurance policies is verified, not only the points will be supplemented, but also the points may be less or not divided according to Article 1092 of the Civil Code. Second, in relation to household debt: where a policy’s cash value is pledged as collateral for a loan, the pledged debt shall be repaid prior to dividing the remaining value upon divorce; if the policy is used to secure another person’s debt, the burden of such security must be taken into account during the division. Third, and inheritance convergence: after the death of one party, the policy claims to the beneficiary, do not enter the estate division, the arrangement of the designated beneficiary at the time of insurance directly affects the rights and interests of the two scenarios of divorce and inheritance, the divorce agreement should be synchronized to clarify the beneficiary change.

From the perspective of overall property planning, it is suggested to put "cash + insurance + real estate + equity" into one table as a whole: the cash value of the insurance policy is the part with poor liquidity and high discount loss, so cash, deposit and insurance policy can be exchanged during negotiation to reduce the loss of surrender; the education fund insured for children is regarded as a gift to children and can be used as a supplement to the upbringing arrangement; for financial policies with long insurance terms and large value-added space, it is often more in the long-term interests of both parties to retain and hold than to withdraw the money. Proper co-ordination can meet the demand for segmentation without sacrificing the protection and value-added function of the policy.

Two types of insurance policies that are easy to be ignored are also worthy of prompt: firstly, the unit group insurance and supplementary medical insurance are usually paid by the unit and guaranteed to survive with the labor relationship, which generally do not belong to the joint property of husband and wife that can be divided, and there is no basis for claiming division in the event of divorce; secondly, the local rules apply to the cash value inquiry, surrender and claims of insurance policies insured in Hong Kong or overseas, divorce division faces additional obstacles to the application and enforcement of the law, and the party advocating division should evaluate the actual enforceability before deciding on a strategy. Also need to pay attention to the policy loan: to the policy cash value pledge to borrow money from the insurance company, the divorce split first clear loan balance, to avoid "divided the cash value, forget to repay the loan".

The difference of "divisibility" of different types of insurance is also reflected in the presence or absence of cash value: pure protection products such as consumer critical illness insurance, one-year medical insurance and term life insurance usually have no cash value or very low cash value, so there is no "division" in divorce. The focus of the dispute is whether the paid premium needs to be compensated, and the holder can compensate the other party according to half of the premium paid in marriage, or not directly; savings, wealth management products (annuities, dividends, universal, increased life) cash value with the contribution of the accumulation, is the main battlefield of the division. The account value of universal insurance and investment-linked insurance fluctuates with the settlement rate, and the value of the account at the point of divorce shall prevail when divided. In addition, the concept of "hesitation period": the withdrawal of insurance within ten to twenty days after insurance can be fully refunded premiums, after the hesitation period can only take cash value-found to be hidden insurance, timely claim, do not drag through the window that can be fully withdrawn.

It is also necessary to distinguish two scenarios of division and inheritance: if one party dies during the divorce proceedings, the policy claims will be paid to the beneficiary according to the benefit arrangement of the insurance contract and will not enter into the estate division; if the beneficiary is not designated or the death of the beneficiary precedes the insured, the claims will be treated as inheritance-the policy arrangement in the process of divorce should also consider the timely change of the beneficiary, avoid the unexpected result of "people leaving and money going to people other than their original match.

Class Case Reference: After the plaintiff and the defendant divorced, there was a dispute over the insurance policy insured for the husband and wife in marriage: one party withdrew the insurance without authorization after the divorce, and the court determined that the cash value of the withdrawal was the joint property of the husband and wife, and ordered him to pay half of the 63227.38 yuan to the other party, while the income from the withdrawal of the insurance for the children belonged to the children. It can be seen that the key to whether the policy can be divided is the source of the premium and whether it has cash value. Trial Court: Zhejiang Wenling Municipal People's Court Case No.:(2019) Zhejiang 10

81Minchu No. 4273

8. Frequently Asked Questions

Is the policy within the insurance period the joint property of husband and wife?

The key lies in the source of the premium and the cash value: For policies purchased with marital joint property and that have a cash value, the cash value portion constitutes marital joint property and is subject to division upon divorce.

Do I have to divide the heavy disease insurance claims when I get divorced?

Indistinguishable. Insurance proceeds received due to personal injury or illness are of a personal nature and constitute the insured person’s individual property.

Which is cost-effective, surrender split or holding split?

It is usually more cost-effective to hold a split: one party continues to hold and pays a cash value discount to the other party to avoid loss of surrender and interruption of protection; surrender is only considered when both parties are unwilling to hold and there is no room for negotiation.

What if the other party secretly buys insurance and doesn't tell me?

can apply for the court to investigate the insurance records under his name in the divorce proceedings, or apply for an investigation order to obtain from the insurance company; if the concealed property is verified, he can claim to have less or no division.

Can the pension insurance account be divided?

Yes.For old-age insurance premiums paid in common property after marriage, one of the parties may claim that the portion actually paid by the individual during the marriage relationship shall be divided as common property at the time of divorce (Article 80 of the Interpretation of Marriage and Family of the Civil Code).

9. Practical Insights from a Lawyer

If the insurance is still within the insurance period, it doesn't mean that it has to be divided. The key depends on two things: whether the premium is paid with the joint property of husband and wife, and whether the insurance policy has cash value. Where the common property is insured and has cash value, the cash value part usually belongs to the divisible common property, while the compensation of the nature of personal injury compensation obtained by illness, accident or disability is generally attributed to the individual, and the education fund insured for the child is usually regarded as a gift to the child and does not participate in the division. First, divide the types into the right ones, then talk about how to divide them, so as not to quarrel in the wrong direction as soon as they come up.

Inventory is the first step, but also a step that many people ignore. To find out the type of all policies, the insured, the insured, the beneficiary, the premium paid, the number of years of payment, the current cash value and the loss of the withdrawal can be checked one by one through the official channels of the insurance company or the policy records. The pre-marital contributions are then separated from the marital contributions, with only the portion of the marital contributions made in common property involving division. Attention should also be paid to the large amount of new insurance policies during marriage. If the insurance is suddenly taken out after the relationship has gone wrong, it is likely to be suspected that the property is transferred with the premium. Such clues should be fixed as soon as possible.

There are usually two types of division schemes: one party continues to hold the insurance policy and compensates the corresponding cash value of the other party; or the cash value is divided after the insurance is surrendered. Withholding insurance is often discounted and lost, so in most cases it is not as cost-effective as "one party's retention order and the other party's compensation. During the negotiation, you can calculate the specific figures of the surrender loss to the other party, and use "continue to hold no loss" to persuade the other party to accept the compensation plan, which is easier to reach an agreement than simply arguing about "whether it should be divided or not. In addition, don't forget to change the beneficiary at the same time, otherwise the death insurance may fall back into the dispute in the future, leaving a tail.

Whether the insurance policy in the insurance period is divided or not depends on the type first and then on the source of premium: the cash value of the financial insurance policy, the personal exclusive property of the insurance claim, and the nature of the gift of the children's insurance policy. Operationally, it is suggested that before divorce, the family policy list should be sorted out, the cash value should be inquired, and the priority should be given to "holding + discount compensation" when negotiating, and the other party should apply for court investigation in a timely manner when hiding the policy.