Divorce & Insurance: What You Need to Know
Going through a divorce is a highly stressful event, and usually laden with emotion. We are here to help when it comes to adjusting your insurance. As long as both of you are listed as “named insureds” on a policy, we cannot delete one of you from the insurance plan, and we cannot change your insurance without consent from your ex-partner.
In other words, we cannot make changes to your joint insurance plan when only one of you requests the change. That said, there are certain steps you can and should take when it comes to your insurance plan. Here are some important things for you to consider.
Life Insurance
If you have life insurance in place, you might want to consider keeping it in place even after divorcing. If you are paying alimony, your ex-spouse might rely on your payments for cost of living and child support. If you have no financial obligations to your former spouse, you may want to continue your life insurance but name a new beneficiary.
You have the option to declare your children to be the beneficiaries of your life insurance, but be aware that minors under the age of 18 cannot directly receive life insurance benefits. In case of your death, the money would either be managed by a court-ordered trustee, or the insurance company would hold the benefit until the child turns 18. Our best advice to avoid these options would be to contact a family attorney who can establish a trust which can be named as the beneficiary.
If you are the spouse who receives alimony, you might consider adding a clause to the divorce settlement that the life insurance beneficiary cannot be changed or allowed to lapse without your consent.
Auto Insurance
Once your ex-spouse moves out, you should update the garaging addresses and commuting distance of all vehicles on your car insurance.
Once the divorce is final, separate your car insurance policies. If you choose to stay with your current insurance company, you’ll be allowed to keep your credits and discounts for being a “Safe Driver” or a “Continuous Customer” even if you have to apply for a new policy.
Who will list your teenage kids on their policy? It’s best to review your specific circumstances with your broker to make sure that the coverage is structured properly. If a child lives more frequently with one parent, then the child should be covered by the insurance policy of that parent.
Related: What Teens Need to Know About New Driver Insurance
Home Insurance
If you are the spouse who is moving out, please give us a call to set up insurance for your new place. If you’re staying in the home you shared, let your insurance company know so they can update the named insureds on your policy.
Health Insurance
You may need to find a new health insurance plan if you have been previously covered on your spouse’s group health insurance policy. In this case, you should check if you qualify for COBRA, which allows divorcing spouses to continue their current health insurance plan for up to 3 years following the divorce, at their own expense.
If you qualify, it can be a relatively quick and hassle-free way to ensure continuous health insurance coverage. On the flip side, you may develop a condition that limits your insurability and keeps you from obtaining your own health insurance plan once your coverage through COBRA ends.
If you have children, compare your and your spouses’ plan, and enrol your children on the better plan.