Divorce is always more than a mere physical or financial separation. Most of us know, either from personal experience or from acquaintance with those who have such experience, that is usually emotional turmoil associated with divorce. Still, the financial end of things can be a source of emotional turmoil all its own.
One aspect of divorce that can be a challenge is insurance. This includes insurance in many of its forms: life; health; car and home; long-term care; disability. It is important for divorcing spouses to review each of their insurance policies from the perspective of their changing financial circumstances. Doing so will give them an understanding of their financial needs going forward.
Much could be said about each particular area of insurance, but we’ll confine our comments to just the basics. First on the docket should be life insurance-divorcing parties should check the beneficiaries of their policies and ensure they still express their wishes. Life insurance policies can be an important point of negotiation between divorcing spouses. The cash value of any permanent life insurance policies should be considered alongside other assets during the divorce.
In terms of health insurance, it is very common for couples to be under one spouse’s plan. Divorce, of course, will require a change of policy. But it is important to note that federal law allows a person going through a divorce to remain on a spouse’s group policy for a limited time. This can be spendy, but this too can be a point of negotiation in the divorce. Providing coverage for the children is an important point that will need to be taken up as well.
In our next post, we’ll continue looking at other forms of insurance.
Source: Fox Business, “How to Uncouple Your Insurance in Divorce,” Michele Lerner, May 31, 2013