There are many issues to consider at the time of divorce: e.g., how will you share time with the children, who will get which cars, where will the furniture end up, and what will become of the family home.
An issue you may not have considered is the need to purchase insurance to cover necessities that may crop up. If you are a primary economic provider for your children or for a spouse’s alimony, the judge may require you to obtain and maintain life or disability insurance to cover those expenses in the event of your death or incapacitation. In almost all cases, the court will require you to provide health and dental insurance for the children if you were the one who provided it prior to the divorce.
Many people have insurance coverage through work. If that is your situation, it’s a good start. But will it be enough? If your children are young, perhaps the amount of life insurance you have through work won’t be enough to get them up to age 18 and even beyond – college educational expenses, for example. So even if you have insurance through employment, it is still important to sit down and decide how much insurance you should carry.
Be aware that you are not the only person who should carry insurance. If your spouse pays part of the children’s expenses, or is responsible to you for making payments to pay off the house, you should demand that your spouse obtain enough life and disability insurance to make sure your needs and your children’s needs are provided for in the case or his/her death or disability.
There are several types of insurance to consider: life insurance, disability insurance, health and dental insurance, home insurance, and car insurance are good ones to begin with.
What Are Your Life Insurance Needs Going to Be?
When you are obtaining a divorce you will want to check your life insurance policy or policies to make sure they are updated to meet your new needs. Be sure to get copies of all insurance policies you have, including any you have through employment.
You may want to change the beneficiaries listed on your policy, but some states do not allow you to do this while you are in the middle of a divorce. Be sure to contact a divorce attorney before you change anything.
Depending on how much support you are now providing for your children (both child support payments and any other expenditures you have outside of child support), you may want to increase the amount on your life insurance policy or buy one that is separate from your work policy.
If you will be dependent on your ex-spouse for support and alimony you may want them to increase the amount of coverage on their policy. Make sure you get a copy of any policy where you or your children are named as beneficiaries.
What Would You Do in the Event You Became Disabled?
Disability insurance is not something that a person gives much thought to until an event has already occurred that leaves them either with limited work options or completely unable to work. This becomes an even bigger issue if after a divorce you are responsible for making payments for alimony and child support.
Federal Social Security disability benefits will of course assist you if you are able to obtain them (this can be complicated and difficult – it is best that you get an attorney’s involvement.) However, Social Security itself most likely will not give you the amount of coverage you will need to sustain a livable income plus make any additional payments for child support or alimony. Just to give you an idea, in 2022 the average benefit paid to a disabled worker was $1200. This is why it is important to consider separate disability insurance. You may well have this through work, as will your future ex-spouse.
In the event you become disabled and unable to work, disability insurance will provide monthly benefits. Those benefits can be either a percentage of your income or a preset dollar amount. When you are deciding on a disability insurance policy, make sure to look at your budget and how your spending needs may differ if you were to become disabled.
How Do We Split up Medical Insurance Coverage in a Divorce?
The most common way of covering medical insurance coverage for your children is that whichever spouse was providing coverage during the marriage continues to do so after the divorce. If one spouse pays for insurance, the cost may be balanced by adding or deducting from child support or adjusting alimony accordingly. If both parents can enroll their child in group insurance plans through work, one plan can be designated primary coverage for the child, and the other can be secondary coverage.
Any additional medical expenses for the children should also be taken care of. An easy way of doing this is having each parent pay a certain percentage of the expenses based on what percent of the shared income during the marriage consisted of their own salary.
What Happens if During the Marriage One Spouse Relied on the Other for Their Own Health Insurance?
In many cases, the supported spouse may eventually be able to provide medical insurance for themselves, but not immediately. In all cases following a divorce, an employer will no longer cover a spouse under an employee’s healthcare policy. However, a spouse does have rights under COBRA to continue coverage.
If a spouse works at a company with 20 or more people, then federal law mandates that a divorcing spouse is eligible to apply for coverage under the employer’s plan. This law is known as the Consolidated Omnibus Budget Reconciliation Act or COBRA. If an employer has less than 20 employees, a spouse may still be able to continue coverage under state-specific mini-COBRA laws.
A spouse will have 60 days to notify the employee’s health plan administrator that they would like to continue coverage. They will be able to do so as long as they pay the healthcare plan premium.
Beyond paying for insurance premiums, your attorney will negotiate to have a portion of projected co-payments, deductibles, and out-of-pocket medical expenses split fairly. Based on the assumption that the dependent spouse will be financially independent after the divorce, the ex-spouse receiving health insurance may be expected to bear some of the costs.
When the dependent spouse reaches age 65, either spouse could modify the divorce order to lower the supporting spouse’s health care payments when Medicare coverage begins.
What Will I Need to Do for Homeowners/Renters Insurance?
In the process of divorce, you and your ex-spouse will split up your shared assets in some way, including your valuable household items such as household furnishings, antiques, jewelry, etc. To compensate for this change you may want to consider a new or modified homeowners insurance policy.
Homeowners and renters insurance covers for the value of your household items in the case of incidents like fire or theft. Make sure to talk to the insurance agent about what exactly the policy covers, for some policies may not provide full coverage for some valuable items like jewelry.
Do You Have a Car?
If you own a car whose insurance policy has both your name and the name of your spouse, make sure to get that policy changed. To do this you will need to inform your car insurance agent. Also, make sure to state in your divorce paperwork who is responsible for paying car insurance premiums.
Should I Consult a Divorce Attorney about My Insurance Needs when Getting a Divorce?
Trying to sort out all of your assets and financial needs during the divorce process can be very complex.
Make sure to consult a divorce lawyer not only about the legal aspects of the separation, but what other steps you should take during the divorce process to make sure it goes as smoothly as possible.
