Opinion
WERDEGAR, J.Under what circumstances should disability insurance benefits received by a husband after dissolution of the marriage be divided as community property? In In re Marriage of Saslow (1985) 40 Cal.3d 848 [221 Cal.Rptr. 546, 710 P.2d 346] (hereafter Saslow), where the insurance was purchased wholly out of community funds and payment of the benefits commenced during the marriage, we held benefits received after separation were community property, insofar as they were intended to provide retirement income, and separate property, insofar as they were intended to replace the disabled spouse’s postdissolution earnings.
Here, although disability term insurance for the husband was purchased out of community funds during the marriage, payment of the benefits did not commence until 32 months after the parties’ separation, during which time the husband had paid renewal premiums out of his separate property to keep the insurance in effect. As in Saslow, there was evidence the premium payments during the marriage were made with an intent to provide retirement income. It also appears the husband’s physical condition at the time of separation might have precluded his continuing to enjoy comparable disability coverage without the automatic policy renewal rights that had been purchased by the community.
*1029Under Saslow, however, we look to “the spouses’ intent” not only “at the time the disability insurance was originally purchased,” but also “at the times that decisions were made to continue the insurance in force rather than let it lapse” (40 Cal.3d at p. 861). In the present case, no evidence indicates the husband’s decision to renew the insurance after the parties’ separation, by paying premiums out of his separate property, was accompanied by any intent to provide community retirement income. Accordingly, proof that continuation of his disability coverage was dependent upon policy renewal rights purchased with premiums paid out of community funds would not establish any community property interest in the insurance proceeds. Decisions basing community property interests in term life insurance proceeds upon the community’s purchase of policy renewal rights (e.g., Biltoft v. Wootten (1979) 96 Cal.App.3d 58 [157 Cal.Rptr. 581]) are distinguishable, because of differences between the respective purposes of life and disability insurance, and because interests in term life insurance do not depend upon the Saslow requirement that an intent to provide community retirement income accompany the premium payment for the term in which the proceeds become payable.
Here, the husband appealed from a judgment characterizing disability insurance proceeds as community property. The Court of Appeal reversed. We shall affirm the judgment of the Court of Appeal.
I. Facts and Procedural Background
John H. Elfmont (husband) and Edie M. Elfmont (wife) were married in 1975 and separated on May 1, 1987. They have a daughter bom in 1978 and a son bom in 1979. The present dissolution proceeding was commenced in August 1987.
Husband was bom in February 1939. During the marriage he practiced medicine as an obstetrician and gynecologist. In 1977, he incorporated his medical practice, established a corporate pension and profit-sharing plan, and took out disability insurance that would pay $3,500 per month. The coverage under that policy was increased to $4,000 per month in 1980 and to $5,000 per month in 1983. In 1982 and 1984 he purchased two more policies, each for $2,000 per month, bringing the total benefits payable upon his disability to $9,000 per month. All of this disability coverage was in the form of three-month term insurance. Each policy guaranteed renewal upon timely payment of the renewal premium, but provided that, if the premium were not paid within the 31-day grace period following the expiration of any 3-month term, the policy would lapse. Before the parties’ separation, all the premiums were paid out of community earnings.
*1030At the time of separation, husband’s medical practice was grossing about $450,000 per year and contributing almost $60,000 per year to the corporate retirement plan, which had a total value of approximately $600,000. After separation, husband kept the disability insurance in effect by paying the premiums out of his separate property.
In 1989 husband became disabled from a disorder of the lower back. He thereafter made arrangements to sell his medical practice, with a covenant not to compete, for $265,000. As of January 1, 1990, he applied for disability insurance benefits of $9,000 per month. The benefits became payable, after policy waiting periods, on February 1, 1990, under the larger ($5,000 per month) policy and on April 1, 1990, under the two smaller policies. Payment of the benefits is expected to continue indefinitely, so long as he remains unable to resume the practice of medicine.
At the trial to determine issues of property division and support, husband explained how his lower back disorder, for which he receives the benefits, interfered with his obstetrics practice. He described his disability as consisting of multilevel degenerative disc disease in the lower back, a compression fracture of the first lumbar vertebra, and osteoarthritis in the neck. He thereby related the disability to two separate incidents, one before, and the other after, the parties’ separation.
Husband testified the first incident was brought to light, in 1985 or 1986, by CAT-scan (computerized axial tomography) findings showing a large herniated disc between the fifth lumbar and first sacral vertebrae on the left side. In hindsight, he traced the source of those findings to an occasion in 1980 or 1981 when he lifted his then two-year-old daughter off a coffee table. He knew at the time he had hurt his back, but did not then think the injury was significant. In written applications for increased disability insurance in 1982, 1983 and 1984, he denied having any back disorder or other physical impairment.
The second incident occurred in the summer of 1989, when he was injured on a ride at a water slide park. An examination showed he had incurred a compression fracture of the body of the first lumbar vertebra and a slipped disc between the fourth and fifth lumbar vertebrae on the right side.
Wife testified as follows: When husband lifted their daughter from the coffee table in 1980 or 1981, he had significant pain “a good part of the week” and, after that, intermittent pain that “never went away.” One day he told her of hearing about a physician in his 50’s who hated his practice and wanted to quit. The physician had a slipped disc that he deliberately neglected, letting it degenerate, with the result he ultimately was able to claim *1031disability. Someone had suggested to husband that he “do that.” He told wife, “I’m going to retire by the time I’m fifty no matter what happens.” Wife’s testimony was corroborated by a family friend, who testified to hearing repeated expressions by husband of a desire to retire by the age of 50.
After considering arguments on the applicability of Saslow, supra, 40 Cal.3d 848, the trial court made oral findings to the following effect: the benefits husband receives from the disability coverage as originally purchased in 1977 and increased in 1980 to $4,000 per month are his separate property, because that coverage was intended to replace his earnings. But the remaining benefits of $5,000 per month, derived from the addition of $1,000 per month to the original policy and the acquisition of two more policies for $2,000 per month each, are community property, because husband acquired the additional insurance for a different purpose. As the court explained: “Circumstances had changed. He [husband] knew he had a problem with the back. I don’t think there was anything fraudulent about [insurance] applications, because there was no specific proof that he had a herniated disc. . . . But I think in the back of his head he knew he was going to have a problem, and that consequently that whole program was geared toward that.” Since the court was speaking in the context of our Saslow decision, we infer that, in the court’s view, the purpose for which husband acquired the additional insurance was to provide retirement income.
The judgment, dated June 14, 1990, describes the three disability insurance policies and provides that (1) $1,000 out of the $5,000 to be paid monthly under the first policy is community property; (2) all of the $4,000 per month to be paid under the other two policies is community property; and (3) the total monthly community property benefits of $5,000 are to be paid $2,500 to husband and $2,500 to wife. The judgment also requires that husband be reimbursed $7,850 from the community for “payments from his separate property of premium payments on the community portion of the Provident disability policy.”1 Husband appealed, challenging only the provisions of the judgment finding $5,000 per month of his disability benefits to be community property. Wife did not appeal.
The Court of Appeal, one justice dissenting, reversed with directions to find all the disability insurance benefits to be husband’s separate property and to adjust spousal and child support accordingly. The majority declined on two grounds to apply the requirement of Saslow, supra, 40 Cal.3d 848, that postseparation disability benefits be classified as community property *1032insofar as they are intended to replace retirement income. First, husband here not only purchased disability insurance, but also invested community funds in a substantial retirement plan, whereas the husband in Saslow did not have a retirement or pension plan and could reasonably be found to have procured disability insurance as a substitute for any such plan (40 Cal.3d at pp. 855, 862). Second, unlike the husband in Saslow, who began drawing disability benefits before the parties separated, husband here used his separate property to pay renewal premiums on the insurance after separation, and his disability giving rise to the benefits occurred only thereafter, during a policy term for which the premium had not been paid with community funds.
The dissent in the Court of Appeal, on the other hand, would have allowed the community a reduced amount of the $5,000 per month benefits the trial court found to be community property, calculating the reduction as follows: first, those benefits would be divided between community and separate property shares proportionately to the relative amounts of community and separate funds used to pay the premiums on the underlying insurance before and after separation. Second, the community property share would be further restricted to benefits received by husband before he reaches 59V2, the age at which his fully funded pension plan becomes available as a retirement resource. All subsequently received disability benefits would be husband’s separate property, on the theory those benefits were intended to provide for retirement only until he begins to receive pension benefits.
II. Intent to Provide Retirement Income
In Saslow, supra, 40 Cal.3d 848, we recognized that “[t]he primary purpose of disability benefits is to compensate the disabled spouse for lost earnings—earnings which would normally be separate property” (id. at p. 860). The benefits, if acquired with community funds, become community property only “insofar as they are intended to provide retirement income.” (Id. at p. 861, fn. omitted.)
The Court of Appeal concluded any finding of an intent during the marriage to use the disability benefits as retirement income was precluded by the fact that here, unlike in Saslow, husband had invested up to $60,000 a year in his professional corporation’s tax-qualified pension plan, a plan that was worth approximately $600,000 at the time of separation and was to become available for distribution when he reached the age of 591/2. We disagree. Husband’s investment in the pension plan did not preclude the trial court from finding the parties intended to supplement the retirement income produced by the plan with benefits from the disability insurance. The court could reasonably infer income from both sources would be required to *1033maintain the standard of living the parties were deriving from husband’s lucrative solo medical practice, particularly since further contributions to the pension plan would be cut off if he fulfilled his wish to retire at age 50.
Other evidence tends to support the trial court’s view, expressed in oral findings, that, prior to the parties’ separation, the disability insurance in dispute was acquired and maintained out of community funds for the purpose of providing retirement income. Husband testified he hated medical practice, and wife gave testimony of husband’s determination to retire by the time he was 50, no matter what happened, and of his tale of a physician who also hated medical practice and had deliberately let his back deteriorate in order to claim disability benefits. Husband’s experience of hurting his back in lifting his small daughter, while it did not produce an injury significant enough to require disclosure on disability insurance applications, may have raised in his mind the possibility of following the other physician’s example.
Saslow, however, indicates that in apportioning disability insurance benefits between community and separate property, the court should consider the spouses’ intent not only “at the time the disability insurance was originally purchased,” but also “at the times that decisions were made to continue the insurance in force rather than let it lapse” (40 Cal.3d at p. 861). Spousal intent at the latter time is especially important when a basic change of circumstances, such as the parties’ separation, has intervened since the insurance was originally purchased. Here, of course, there is no indication or suggestion that husband had any intent of providing community retirement income when, after the parties’ separation, he used his separate funds to renew the disability policies for additional terms.
III. Purchase of Insurance With Community Funds
Postseparation disability benefits, even if intended to provide retirement income, may be treated as community property only to the extent they were “purchased during marriage with community funds” (Saslow, supra, 40 Cal.3d at p. 854). During the parties’ marriage and up to the time of separation, community funds were used to purchase each of the insurance policies underlying husband’s disability benefits and to renew each policy for additional three-month terms. After separation, however, husband paid further renewal premiums out of his separate property, thereby keeping the insurance in force until he qualified for disability benefits 32 months later.
Term disability insurance is similar in some, but not in all, respects to term life insurance. “Term life insurance policies typically contain two elements, dollar coverage payable in the event of death and a right to *1034renewal for future terms without proof of current medical eligibility. [¶]... [A]s to dollar coverage, term life insurance upon which premiums were paid from community funds has no value after the term has ended without the insured having become deceased.” (Estate of Logan (1987) 191 Cal.App.3d 319, 324 [236 Cal.Rptr. 368].) “If the insured remains insurable, the right to renew the policy has no value since the insured could obtain comparable term insurance for a comparable price in the open market.” (Id. at p. 325; accord, In re Marriage of Spengler (1992) 5 Cal.App.4th 288 [6 Cal.Rptr.2d 764]; see In re Marriage of Lorenz (1983) 146 Cal.App.3d 464 [194 Cal.Rptr. 237] [term life policy insuring a still living spouse not a community asset because it lacks present cash surrender value].)
An insured who is not medically “insurable,” however, may be unable after separation to continue life insurance coverage except by exercising the policy’s renewal right, previously purchased with community funds, and paying renewal premiums for one or more additional terms out of his or her separate property. If the insured then dies during an additional term thus purchased, it has been held that the community has an interest in the life insurance proceeds commensurate with its contributions to the right of renewal. (See Bowman v. Bowman (1985) 171 Cal.App.3d 148, 159 [217 Cal.Rptr. 174]; In re Marriage of Gonzalez (1985) 168 Cal.App.3d 1021 [214 Cal.Rptr. 634, 54 A.L.R.4th 1195]; Biltoft v. Wootten, supra, 96 Cal.App.3d 58.)
That the community’s purchase of renewal rights in term disability insurance gives rise to an analogous community property interest in disability benefits does not, however, follow. Term life insurance and term disability insurance have dissimilar purposes. The proceeds of a term life policy are payable not to the insured, but to survivors, offsetting the economic consequences of the insured’s death. To provide for a former spouse’s participation in those proceeds, when premium payments from community funds have purchased policy renewal rights necessary to keep the insurance in force, may well be appropriate.
The purpose of term disability insurance, by contrast, is to replace lost earnings. If during the marriage an insured spouse becomes disabled, the benefits received are community property because they replace community earnings. (In re Marriage of Jones (1975) 13 Cal.3d 457, 462 [119 Cal.Rptr. 108, 531 P.2d 420].) If the benefits continue after the spouses have separated, they are the separate property of the insured spouse whose earnings they replace, unless during the marriage the premiums were paid out of community funds with the intent that the benefits provide retirement income. (Saslow, supra, 40 Cal.3d at pp. 860-861.) If, however, the insured spouse has not become disabled during the last policy term for which a premium *1035was paid before the parties’ separation, the community will have no interest in benefits produced by renewals of the policy for subsequent terms, because the renewal premium will not have been paid “during the marriage with community funds” and with the intent of providing community retirement income (id. at pp. 854, 861).
A contractual renewal right that is included in a term disability policy purchased and renewed during the marriage with community funds may afford an insured spouse, who is medically ineligible for new insurance when the parties separate, an opportunity to obtain further disability coverage that would otherwise be unavailable. But unlike a right to renew term life insurance, which keeps alive a possibility of benefits in which the community will have an interest, the right to renew the insured spouse’s term disability insurance after separation does not give rise to any community property interest in the insured’s disability benefits. (See Saslow, supra, 40 Cal.3d at p. 861, fn. 5.)2
IV. Conclusion
None of husband’s disability insurance benefits became payable dining terms of policy coverage for which the premiums had been paid out of community funds during the marriage with the intent of providing community retirement income. Instead, husband became entitled to draw the benefits only after he had renewed all three term policies, following the parties’ separation, with premiums paid out of his separate property and with no such intent. Accordingly, all the benefits are his separate property.
The judgment of the Court of Appeal is affirmed.
Lucas, C. J., Mosk, J., Arabian, J., and Baxter, J., concurred.
All three disability policies were issued by Provident Life and Accident Insurance Company.
Justice George’s concurring and dissenting opinion, though agreeing that all the disability benefits are husband’s separate property, proposes that the trial court be directed, on remand, to require husband to reimburse the community for the value of his contractual rights to renew the policies. Yet no such reimbursement was requested or even suggested below by either party. Valuation of the supposed rights, moreover, would be enormously difficult. For example, since “the insured spouse [who] chooses to let the policy lapse upon separation. . . would not have any obligation to reimburse the community” (conc. & dis. opn. of George, J., post, at p. 1042), should valuation be predicated upon renewal for only a single term, or, if not, how should the number of future renewals be predicted? Generally, questions of compensating the community for items that have no conceivable value to anyone except the spouse (unlike custom clothes, golf clubs or stock options, which do have such value) can be addressed more effectively by the Legislature than by the courts. (Compare, e.g., In re Marriage of Aufmuth (1979) 89 Cal.App.3d 446, 460-461 [152 Cal.Rptr. 668] [professional education held not a community asset] with In re Marriage of Sullivan (1984) 37 Cal.3d 762, 766-768 [209 Cal.Rptr. 354, 691 P.2d 1020] [discussing former Civ. Code, § 4800.3 (now Fam. Code, § 2641) on reimbursement of community for contributions to spouse’s education or training].)