Insurance Matters & How it Relates to Divorce
Major changes like divorce tend to affect a wide variety of financial issues—especially insurance. While it can be difficult to focus on dry financial issues like insurance during a divorce, doing so means preventing more problems down the road. Read on and learn how to address needed changes to your insurance.
Be sure to speak with your spouse about how to handle this issue as soon as possible after you separate. There is always a chance that your spouse could remove you from the policy without telling you, leaving you uninsured. You will need your own policy so shop around and get quotes. Unfortunately, divorced singles can pay more for their coverage than married drivers. Know what coverage you need and take care not to opt for extras you don't need. For example, if you already have AAA, you probably don't need the optional roadside assistance add-on. If you have children old enough to drive, you might need to have them listed as drivers on both of your policies.
You may need to wait until the divorce is final to make changes to your homeowner's policy unless you already know who will take possession of the family home. The policy should be held in the name of the owner. If you need to move to a rental, don't neglect the need for renter's insurance. Remember, homeowner's and renter's insurance covers more than replacement or repair, it also covers guest injuries and that window your kid threw the ball through.
You have a window of time to make plans for coverage during the divorce. After the divorce is final, you can no longer be covered (or cover your spouse) under a spouse's plan. You have several options:
- You can seek your own healthcare coverage through a job. Even if it's outside the open enrollment period, divorce counts as a life change.
- If you have income but no work plan, you can be covered under the Affordable Care Act.
- If you live in a state that has expanded Medicaid, you might qualify for coverage.
- You can stay on your spouses plan using COBRA, though this option is often very expensive.
This issue may be part of your divorce agreement. The spouse providing child support and/or spousal support may be required to purchase a plan that covers the other spouse and child. You may also want to consider removing an ex-spouse as a beneficiary on your plans if you won't be paying support to them.
Speak to your divorce lawyer more information about insurance matters that need to be addressed in your decree.