Divorce, Debt, and Finances

Tips, Struggles and Successes navigating Divorce, Debt and Finances

The Ins & Outs of Insurance after a Divorce

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With so many things to think about as you go through a divorce, insurance policies may slip your mind.

This is one detail you won't want to miss, as it could cost you and potentially your kids.

Think about all the insurance you may have: medical insurance, life insurance, automobile insurance, and homeowners insurance.

Most likely all of the policies are in yours and your ex's name together. So let's take a look at how and why you should close out those policies and get ones of your own.

  • Medical insurance. When it rains it pours. You are going through a divorce and you fall and break your leg. Ouch! Yes, it hurts physically, and it can hurt you financially, too. Are you still covered if you were on your ex's insurance? The good news is, most likely yes. In most states, you can remain on your ex's policy through COBRA for up to 36 months after the ink has dried on your divorce papers, provided you are willing to pay for the premium. Got kids? They can remain on your ex's policy. Just be sure it is noted in your divorce paperwork who will take on the kids' insurance. Surprises are never good when it comes to unexpected medical bills in the mail.
  • Life insurance. Removing your spouse from your policy should be a priority. Divorce laws vary from state to state when it comes to life insurance, so the best way to handle policy changes is to speak with your agent. You will immediately want to change your beneficiaries. If you have kids and plan to name them as beneficiaries, you may consider opening a trust fund and appointing a beneficiary to the trust fund. This could be one of your parents, a sibling, or a long time family friend who has the kids' best interests in mind. By setting up the trust, your ex will be unable to access the money in your absence.
  • Auto insurance. If you and your ex shared a policy and it has been paid in advance consider leaving it alone until renewal. At that time you can cancel the joint policy and open one on your own. Keep in mind it may cost you more for auto insurance, as discounts for marriage, home ownership, and policy length may be revoked. Be sure to budget for the potential extra cost.
  • Homeowners insurance. Are you staying in the home? Is your name on the homeowners insurance policy? If the answers are yes and no, respectively, call your agent immediately. In some instances, if the insurance is in your ex's name your stuff won't be covered. Make sure to take the steps to adjust the policy to reflect your name if you plan to stay in the home. Also be sure this change and associated costs are outlined in your divorce paperwork.

The bottom line: insurance of any kind is essential. Insurance protects you and your family from living in the poor house should there be a medical emergency, a death, a random rear ending incident, or if your neighbor's kid decides to hit a baseball through your window. So protect yourself and don't forget this important detail in your divorce.

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Suzanne Cramer

Suzanne is a certified credit counselor working in our Ask the Expert forums as a coach and a Social Media Specialist for CareOne. Suzanne writes for our Divorce, Debt and Finances and A Straight Talk on Debt blogs.  Follow Suzanne on Twitter where she shares the latest debt industry news and tips to keep your finances in check with her ADivorcedMom and AskCareOne accounts.

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  • Obviously, it was a no brainer, we weren't going on vacation. I called the agency that we booked through and of course when they asked if I had purchased the travel insurance, my answer was "nope".

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