Just about everything changes with divorce, and those changes can affect the protections many couples enjoy with insurance. To learn why divorce should prompt a review of your coverage, read below.
Life Insurance: Part of the Divorce
You might be surprised at how life insurance figures into your divorce. In this case, the connection between life insurance and child support is the focus. Some states require the parent who is obligated to pay child support to maintain a life insurance policy so that the child will be covered in the event of the parent's death. Since children under the age of 18 cannot be the beneficiary of a life insurance policy, the beneficiary might be the other parent. However, you might also consider creating a trust and appointing a trustee to oversee and disburse the funds. Also, both parties should check on the beneficiaries of their policies to ensure that they are updated to reflect the changes in relationships. If you don't, your former spouse may benefit upon your death.
Protecting the Home
This form of insurance is dependent on who becomes the owner of the home, so changes may have to wait until the divorce is final. It's vital, though, that the name on the homeowners' insurance match the names on the deed. You may not want to have to deal with your spouse if something should happen to the home and you have to file a claim. If you rent or are about to become a renter, consider rental insurance. It's affordable and a huge help when things go wrong.
Many people forget that they are using their spouse's work-related policy for medical coverage. Don't assume you still have coverage just because you have not been contacted. Waiting until the divorce is final is risky so make arrangements as soon as possible. In many cases, the coverage of minor-aged children becomes a divorce provision. The parent who has been providing coverage, who makes the most money, or who primarily resides with the child may be ordered to provide healthcare coverage for the child going forward as part of the divorce proceedings.
You don't have to be divorced to make changes in your auto insurance policy. Most insurers don't cover those that are not living under the same roof, so don't neglect to update things. Unfortunately, some may remove the other spouse from their policy without letting them know about it. This and other forms of retaliation should be reported to your divorce attorney right away along with any questions about the divorce and how the law looks at insurance matters.