Addressing insurance coverage issues after divorce

In the immediate aftermath of a divorce, most people will need to spend some time focusing on getting their affairs back in order. A big part of this is adjusting to the financial realities of life in a one-income household. As such, most recent divorcees will need to reevaluate their insurance coverage in light of the fact that they are no longer married.

There are a number of changes most newly divorced people will have to make to their insurance portfolios. Some of the most common issues are discussed below.

Medical insurance

Individuals who were covered under their ex-spouse’s employer-sponsored health insurance will need to find new coverage once the divorce is finalized. Ex-spouses are allowed to continue COBRA coverage for up to 36 months after the divorce, but this coverage can be quite expensive. For new divorcees who do not have access to their own employer-sponsored coverage, it may make more sense to shop for health insurance on the private market.

Children, on the other hand, will likely be able to continue coverage under a parent’s employer-sponsored health insurance policy, even if that parent does not have primary custody. A duty to provide insurance coverage for children should be established as part of the divorce settlement.

Life insurance

Most married people who have life insurance list their spouse as the beneficiary. After a divorce, the beneficiaries should be changed.

In addition, divorcees who are receiving alimony or child support payments might want to consider taking out a new life insurance policy that will replace these payments in the event their ex-spouse passes away.

Auto and home insurance

It is important to update home and auto insurance policies as soon as possible after a divorce. Being uninsured can have devastating consequences in the event of an accident or break-in. In addition, securing an individual policy can provide protection from rate increases that could occur if an ex-spouse gets a ticket or causes a car accident.

Disability insurance

Disability insurance will provide much needed wage replacement benefits in the event that policyholders experience an illness or injury that prevents them from working. Most new divorcees can benefit significantly from purchasing disability insurance, since they will not have a spouse’s income to rely on.

Working with a divorce attorney

It is important to discuss these and other insurance issues with an attorney before the divorce is finalized. In some instances, the circumstances of the case may warrant including insurance issues in the divorce agreement.