When compared to the emotional disturbance of a marriage ending, insurance matters can appear insignificant. Countless aspects of your life will change, and taking care of administrative issues such as insurance may not be a priority. However, dealing with a few important details after a divorce can prevent you and your loved ones from suffering financial headaches later on.
Depending on your situation, you may want to either remove or keep your ex-spouse as your beneficiary in your existing policy. If you have no financial obligations to your ex-spouse, you may opt to change your beneficiary. If you are paying for spousal or child support, on the other hand, then your ex-spouse may be relying on your payments. Removing your ex-spouse as beneficiary in such event could leave both your ex-spouse and children in financial chaos in the event of your passing.
If, however, your ex-spouse is paying you spousal or child support, see to it that you remain as his or her beneficiary so you can continue to be provided for in the event of your former spouse’s passing. Consider adding a clause to the divorce settlement that the life insurance beneficiary cannot be altered without your consent.
While you may opt to make your children the beneficiaries of your insurance policy, remember that minors below 18 years old cannot receive life insurance benefits directly. In the event of your death, the money will be managed by either the insurance company or a court-ordered trustee until the children reach 18 years of age. You may wish to consult with an attorney about establishing a trust.
If you were previously covered by your ex-spouse’s health insurance policy, it would be best to obtain your own separate coverage. Some options are to sign up for coverage under your employer if it is offered, or purchase a policy directly from a health insurance company. You may also decide to keep the coverage via your former spouse’s plan, but pay for it. To do this, you’ll need to qualify for COBRA insurance. COBRA, named after the Consolidated Omnibus Budget Reconciliation Act, provides certain individuals the right to temporarily continue health coverage at group rates.
If you have children, take a close look at both your plan and your spouse’s plan, and enroll your children under the better health insurance plan. Note that coverage may be changed or reduced to emergency care if the policyholder and the children reside in different states.
After your divorce, see to it that you obtain your own separate car insurance policy so that only your name remains on the vehicle that your drive. If you have young drivers in the family, ensure your children are covered on one or both parents’ car insurance policies—particularly if the children have access to both your car and your ex-spouse’s. If your children have their own car, the car should typically be registered and insured under the name of the parent with whom they stay with most frequently.
If you do not already have it, you may want to consider obtaining disability insurance. Now that you will only be depending on your own income, it becomes even more important that you are insured should you become unable to work due to an injury or illness. If you will be depending on spousal or child support payments, request that the divorce agreement require your ex-spouse to have coverage.
If you are staying in the marital home, call your insurance provider to change your policy to your name only. If you are the spouse moving out of the marital home, don’t forget to obtain homeowner’s or renter’s insurance for your new place.
The last thing you need after a divorce is to deal with inconveniences. Making some changes on your insurance policies can give you peace of mind that a protection plan for you and your loved ones is in place if something happens.