Figuring out what will happen to all your different insurances post divorce may be difficult to understand. We’ve identified the top 5 different insurances and the crucial changes that will happen to them after a divorce.
Buying life insurance and naming an ex-spouse as beneficiary may be required under a divorce agreement. If a former spouse dies, the surviving ex-spouse can use the life insurance payout to replace alimony or child support payments.
If there are no ongoing financial obligations as part of a divorce agreement, then it may make sense to remove an ex-spouse as a beneficiary on an existing life insurance policy.
Disability insurance pays a portion of your income if you can’t work because of an injury or illness. It’s often overlooked, yet financial experts rank it up there with life insurance as an important financial priority. The odds of becoming disabled for 90 days or more are greater than dying before retirement. Today’s 20-year-olds have a 1 in 8 chance of dying before reaching age 67 and a more than 1 in 4 chance of becoming disabled, according to the Social Security Administration.
Couples should plan for disability insurance before the divorce is final, the American Institute of CPAs says. It’s a good idea to have disability coverage of your own if you earn an income. If you’ll depend on alimony or child support payments, then you’ll want the divorce agreement to require your ex-spouse to have coverage.
You can keep your health insurance after divorce if you have your own coverage. But you can’t stay as a dependent on your spouse’s employer-sponsored health plan once the divorce is final. You have a few options:
You’ll need separate policies once you’ve divvied up the cars. Let the insurer know about your divorce, and remove your ex as a driver on a policy you keep under your name. If you’re buying a new policy, get car insurance quotes from different carriers. Shopping around for the best deal is especially important because you may lose discounts you had before, such as price breaks for being married and insuring multiple cars with one company.
Let your home insurance company know if one of you moves out during the separation. After the divorce is final, the policy should be in the name of the homeowner.
Meanwhile, shop for renters insurance if you move to an apartment during the separation or after divorce. Renters insurance covers your belongings and provides liability insurance, which pays for injuries or damage you cause others. For instance, it would pay for repairs if your kid threw a ball through someone’s window, or pay for medical treatment if a guest tripped and fell in your apartment and you were held responsible. Renters insurance also pays for expenses if you have to stay somewhere else while your apartment is repaired after a disaster, such as a fire.
Insurance matters can be complicated in the best of times, let alone when you divorce. Keep in touch with your insurance company to make sure all the details are squared away.
Divorce Financial Advice are here to help you make the best decision that is right for you. If you are confused with what will happen to your insurances post divorce do not hesitate to contact us here.
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