As thousands of Chicago-area residents know firsthand, getting married usually means totally intertwining your life with your spouse's. You share a home, a bank account, a car, kids and pets. If your marriage doesn't work out down the road, all of these things will have to be dealt with in some way. While we are not going to address any of those things today, we are going to talk about one area that is easy to overlook but important to address in divorce: insurance policies.
Many married couples share insurance policies -- or at least have each other named as beneficiaries. Forgetting to update this information and separate insurance can lead to serious problems down the road. Today, we'll talk about how to approach life insurance and health insurance during divorce.
As we just mentioned, when dealing with life insurance, one of the most important things to do is update the beneficiary of your policy to reflect your divorce. Determining who will maintain ownership of a policy, however, should be discussed during property division talks. The obligations of each spouse should be considered when deciding how to approach a life insurance policy. If one spouse will be required to pay alimony or child support, that committment should be reinforced by any agreement about a life insurance policy.
Next up is health insurance. Most couples are on the same plan, so one spouse will have to obtain a new one after a divorce -- and you will have to decide whose plan will support your children, if you have any. Although COBRA is an option for divorced individuals for up to three years, it can be expensive, so it's worthwhile to look into other options. If you have trouble finding another plan, consider having your ex pay the premiums until you find something else that works.
Life insurance and health insurance are just two of the many types of insurance policies you and your ex may have shared. As you work through your divorce, make sure to address all of them to help you avoid problems later.
Source: Fox Business, "How to Uncouple Your Insurance in Divorce," Michele Lerner, May 31, 2013