From happily ever after to recently single: Insurance basics when going through a divorce

Posted by Matt Simon on Apr 14, 2016

Going through a divorce? It can be a stressful and overhwelming process, especially when it come to reassessing all of your finances.

One important part of that assessment should be your insurance... and we're here to help alleviate part of your stress.

Below are several types of insurance coverage that you may have, as well as the changes you should consider given your new marital status.

Health Insurance

Health Insurance coverage should be addressed in the final divorce decree. Who pays for what should be clearly stated so that there is no confusion.

If you have children, it’s imperative that an agreement is reached as to who will provide coverage.

Usually, whoever had the coverage for the children prior to the divorce will continue that coverage. Who is responsible for unreimbursed medical expenses should also be addressed.

If you had medical coverage through your spouse’s employer-sponsored health plan, you may be allowed to continue that coverage for up to 36 months under COBRA.

If you do qualify, coverage is not automatic. You must contact the employer within 60 days of the divorce and complete the necessary paperwork.

If you don’t qualify, you should consider a standard health insurance policy or, at a minimum, a policy that would protect you in the event of a major medical emergency.

Life Insurance

You need to review your Life Insurance policies to make sure that they still meet your needs.

You may also want to change beneficiaries at this time. Make sure that your ex-spouse carries coverage, and that you are named as a beneficiary if you depend on their income for support.

Check with your attorney before making any beneficiary changes.

Now might also be a good time to increase your policy face amount.

Who carries life insurance, the amounts of coverage, the named beneficiaries, and accrued cash values should all be addressed in your divorce decree.

Disability Insurance

This pays a monthly benefit in the event that you become disabled and are unable to work. If alimony or child support is ordered, it’s especially important if the payer has no other sources of income to continue to make those payments.

Consider what your needs would be in the event that you became disabled. We can help you determine specifically what type of Disability Insurance, and the amounts you need to best protect your interests.

Homeowners & Renters Insurance

These policies protect your residence and its contents from damage or theft. If one spouse remains in the residence, they need to make sure they change the Homeowners Insurance policy to their name only and review their coverage.

We strongly recommend replacement cost coverage, which will reimburse you for what it would cost to replace an item.  Without this coverage, depreciation would be deducted from any losses you suffer.

If you’re worried about the cost, you can always opt for a higher deductible to help reduce your annual premium.

Automobile Insurance

Auto Insurance covers damage to your vehicle, and damage that you may cause with your vehicle.

Inform your Insurance Advisor if you’re separating or divorcing. Separate policies may be required if you and your spouse are not living under the same roof.

When you divorce, you will need to remove your spouse from your insurance policy. As a single person, you may now find options like towing, rental reimbursement and roadside assistance beneficial.

As with any major life change, it’s critically important to do a thorough insurance review to make sure you have the coverage you need.

Umbrella Insurance & Long-Term Care Insurance

While not as common, if you do have an Umbrella Insurance policy, or a Long-Term Care policy, both should be closely reviewed now that you’re single.  What may seem like minor changes now can have a major impact at the time you need to make a claim.

Helpful tip – avoid post-divorce credit problems by closing all joint accounts.

We understand that divorce can be a very difficult, emotional and stressful time. We promise to make the insurance transition as easy and stress-free as we can.

Just give us a call to discuss your changing insurance needs, and we can complete a comprehensive review to make sure you have the coverage you need should you experience a devastating claim.

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Articles that may interest you

Health Insurance

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Disability Insurance

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Umbrella Insurance

Long-Term Care Insurance

Category: Consumer Tips (1)