Divorce can bring sweeping changes to a person’s life. After the paperwork is finalized, it can seem overwhelming to adjust to changes in home life or in relationships. But it’s important to remember another change that requires attention immediately after divorce: managing separate insurance plans.
Altering health insurance policies is one of the principal changes that must be made following a separation. Often, both spouses are covered under a single policy. After a divorce, spouses should not simply leave their ex on their policy, as this constitutes insurance fraud and could leave your ex unexpectedly uninsured. Recently divorced spouses can apply for coverage on their spouse’s plan under COBRA, but this is only a temporary measure. For long-term coverage, the divorced spouse will need to purchase their own plan.
Life insurance policies may also require attention. Both spouses are usually covered on a single life insurance policy, which is owned by one of the spouses. Only the owner of the policy can make changes to it, such as naming beneficiaries. This means that after the divorce, the other spouse will usually need to purchase their own policy. Insurance payments can be included in divorce settlements; those concerned about maintaining coverage after the divorce may wish to consider this option.
Divorced spouses must also remember to separate their car insurance policies. If both cars were on the same plan before the separation, both spouses will need to purchase a new policy afterwards. Like life insurance, the cost of car insurance can be included in spousal support agreements.
Some spouses may find that their insurance payments go down after a divorce, as they remove their ex-spouses from their policies. Others may find themselves faced with significant monthly payments. Spouses concerned about making those payments may wish to speak to a lawyer about including them in their spousal support agreement. Most importantly, spouses must reassess each policy they control to ensure that they are receiving the proper amount of coverage.
Source: Reuters, “How to untangle your insurance plans in divorce,” Geoff Williams, Sept. 11, 2012
