5 Crucial Insurance Changes After Divorce
Any significant improvement in your life will usher changes in your finances. Getting married or having children needs a change in your insurance policies, you need to update the information and shell out additional cash for the coverage.
Divorce is one major event that will impact your money in the bank and your financial welfare. Emotions run high during these trying times decisions are difficult to think in a stressful situation. Ponder about the financial security of your loved ones after the break-up. Quickly handle insurance changes to prevent future financial consequences.
If you are considering a divorce or are into one here are five insurance coverage that requires your preferential attention.
If you have a life insurance policy before the divorce, it is likely that your spouse is the beneficiary. The court will require you to comply with the divorce agreement to provide alimony and/or child support. This will ensure that beneficiaries will receive support in the event of death.
You need to purchase an insurance policy if you have none with your ex-spouse as a beneficiary. Usually the terms of an insurance policy are:
- 5 years
- 10 years
- 20 years
- 30 years
In case there is no mention of support obligation in the divorce agreement you can remove your ex-spouse as a beneficiary from your life insurance policy.
If you have your own health insurance coverage after the divorce you can keep it. But, you can’t stay as a dependent on your former spouse’s health insurance plan, insurance companies do not allow it once the divorce is final. Here is what you need to do:
- Choose from the Medicaid plans offered by health insurance providers or from your state’s health insurance marketplace. Payment will come from your own pocket.
- Request your employer to include you in the health insurance coverage if it is offered. By law, you can sign up outside the open enrollment period if your former spouse’s policy covered you and lost the coverage because of divorce.
- Keep the coverage from your ex-spouse’s health insurance by paying it yourself. Enroll under the federal COBRA, Consolidated Omnibus Budget Reconciliation Act, insurance which allows spouses who were divorced to buy the coverage up to 36 months.
Now that you are divorced remove your ex from the policy under your name. It will be helpful to shop around for the best deal by getting quotes from different auto insurance providers. Keep in mind that you may lose perks from your previous plans such as markdowns for being married and multiple car enrolment with one company.
Be clear who will pay for the car insurance of your teens and which ex-spouses’ policy will list those drivers. Some insurance providers require both spouses to list their teen drivers on their policies. To be sure, check with your car insurance before you sign.
Your home insurance company knows what is best if a party moves out of the house after the divorce. Once the separation is final, only the name of the homeowner should appear in the policy. Failure to remove the name of the ex in the home insurance plan can cause complications, especially if you need to file a claim.
If both of the parties in the divorce moved out of the house and you are renting an apartment, consider renter’s insurance. This will safeguard your belongings and offer liability coverage for injuries or damages you cause others. For example, It would cover the cost of a cabinet repair if your kid broke someone else’s or the medical treatment for a visitor who slipped on your floor and suffered a fracture and they blamed you for the mishap. It would also cover the expenses of your stay elsewhere while they repair your dwelling after a calamity, like a fire or a flood.
Disability insurance pays a part of your salary if you’re unable to work due to an injury or ailment. Financial pundits rank it alongside life insurance as an essential in financial security.
According to the Social Security Administration the chance of a 90-day injury is greater than death before retirement.
Disability insurance is more important than life insurance if there are support obligations after separation. Couples should include this in their divorce agreement before it becomes final. This will cover alimony and/or child support in case of a disabling injury.