The Changing Insurance Needs of Divorce
When substantial life changes occur it is the ideal time to take a stock check of your insurance requirements and to reassess your financial situation.
Divorce affects a growing number of people every year, and separating requires making an emotional and financial split that can impact on both individual’s current and future expenses.
Carefully monitoring your insurance needs, at this time, can help create a secure basis from which to restart your new single life.
What to do:
- Check and review all the policies that were in place during the marriage.
- Decide which policies you will still need.
- Acknowledge the additional coverage you may need, in the absence of a spouse.
The insurance policies that may need attention are detailed below.
Life InsuranceThe first thing to do is renew the beneficiary details of the policy. If you are the primary provider for your children you may want to consider increasing your Life insurance coverage. If you do not have any Life insurance already in place now is the time to rectify the situation.
If your ex-partner is providing child support it is important to carefully consider the implications of removing them from the policy.
Health InsuranceIt is important to maintain a Health insurance policy for both adults, if there are children involved in the situation. Your ex-partner will still be a large part of your children’s financial future, and so making reassessments must take this into account. If your spouse carried health insurance on your behalf you will now have to provide that yourself.
It is advisable that you do this promptly, with no gaps in insurance coverage, as this will cover you should you later acquire a medical condition that is determined as being a pre-existing condition.
Make sure that your insurance provider knows you will be the primary provider for your children’s health insurance.
Disability InsuranceDisability of any kind can threaten the financial support required to bring up a family, and careful consideration should be made when making any changes. The former spouse, who receives the financial support, should own the policy and should also continue to pay the premiums. This insurance coverage should be included in the financial support package the ex-spouse and children receive as part of the divorce settlement.
Car InsuranceAltering the details on your Car insurance may affect your premium, and may allow you to save money by taking additional options on the policy. It is important to let your insurance provider know of any details concerning a change in driver, vehicle, or amount of driving that may be done. Removing the ex-partner’s name from your policy will also protect you from possible liability, should they be involved in an accident.
Home and Renter’s InsuranceIf, after the break-up, you plan to remain in the same property you will need to ensure the Home insurance policy is in your name. You will also have to check that your replacement cost coverage is still relevant, and will cover the cost of replacing all of your personal possessions.
If you are about to move into a rented home it is worth insuring against the loss of your possessions in someone else’s property.
Mistakes to Avoid Making:
Not discussing the details of Health insurance coverage.
Failure to discuss, and amend accordingly, could leave your children with insufficient funds should the unthinkable occur. Discussing and working out which partner’s health insurance policy provides the better deal will ensure problems do not arise.
Not having Life insurance for the benefit of your children and ex-spouse.
If your ex-spouse is dependent on your income, to bring up your children, you may want to continue to have Life insurance to provide for them should anything happen to you.
Not updating beneficiaries.
Failure to do this will mean your ex-spouse will automatically benefit from your death.