Although divorce can bring new beginnings to the lives of many, it can also mean unwelcome worry about finances. One in five women falls into poverty after divorce and men, too, have financial hardship if they don’t make a majority of the household income in a marriage, according to a study by Utah State University.
One financial consideration that is especially relevant during tax season is the cost of insurance. Health insurance premiums on the federal marketplace rose again in 2016. Donald Trump’s presidency could bring further changes to coverage. Married couples can share plans, but after a divorce, you may find yourself paying more money for less coverage.
From health, life and disability to home and auto, many aspects of livelihood require insurance. The good news is that some insurance can be shared as part of a divorce judgment, but this may be neither possible nor wanted for every couple.
Here are three must-know insurance considerations following divorce:
1. Ex-spouses can be beneficiaries of disability and life insurance.
This arrangement may be required after divorce to replace alimony or child support payments, especially among high-income couples. However, if there is no financial obligation to an ex-spouse after divorce, this may not be necessary.
Individuals may also want to consider their own term life or disability insurance policy as an inexpensive “safety net” for children and other dependents. Today, the odds of becoming disabled for three months or more are greater than dying before retirement. Without a spouse to count on for income, divorced individuals could find themselves without support when they need it most.
2. COBRA may allow ex-spouses to stay on health insurance plans.
Current federal laws may allow ex-spouses up to 36 months of continued coverage after a divorce is finalized, but through the Consolidated Omnibus Budget Reconciliation Act, coverage may be available after divorce.
It is recommended that spouses inform their insurance providers and attorneys of a divorce as soon as possible to arrange proper coverage after the marriage ends.
3. Consider all policies in arrangements.
Every insurance policy that you and your spouse currently carry should be evaluated before a divorce is finalized. Rules occasionally differ between companies and states. Your employer may carry an insurance policy that is not offered in California because they are headquartered in a different state. An attorney can help you understand the fine print of every policy.
When shopping for insurance, we often consider the cost as an investment in our future and security. A trustworthy family law attorney can also allow you to have the confidence in your future through the divorce proceedings.