When you’re dealing with a divorce one of the last things you want to think about are financial issues, but unfortunately it’s a necessary part of the process which can be long and drawn out. Bank accounts, credit card debts and mortgages are usually put at the top of people’s priority lists.
However, your insurance policies are also a serious financial matter that should be addressed as soon as possible.
Common Insurance Considerations During a Divorce
Every divorce has its own unique circumstances. But there are a few things that will likely occur and that you should take care of when it comes to handling insurance.
Review each policy. Now is the time to re-familiarize yourself with all your policies. Pay careful attention to whose name the policy is in and who the beneficiaries are.
Make decisions before policies lapse. Don’t assume that your spouse will continue to pay a policy if it’s in their name or both your names. You could risk losing a policy or incur additional costs if a payment is missed. Decide if you want to keep the policies, and if so, who will be responsible for each policy to avoid these situations.
Change account info. Once it’s decided who will be keeping the policy, update the account information to reflect the changes. It’s also a good idea to contact your Austin TX insurance company directly to let them know about the situation. Don’t forget to change the payment method, especially if monthly payments are automatically drafted from a bank account.
Rates may go up. Oftentimes, people will get discounts when they sign up for multiple policies from one insurance company. If you decide to find a new policy elsewhere, the remaining policies may not be eligible for the discounts. Likewise, if the policies are put in different names on separate accounts they may be subject to higher rates.
Types of Insurance Policies Affected by a Divorce
Home Insurance – If you have a mortgage it is probably required that you have continuous coverage through home insurance, which is usually included in the monthly payments. If so, you just need to decide which spouse will be responsible for making the home payments.
If home insurance lapses and damage happens to the home or an accident occurs on the property, whoever’s name is on the deed will be responsible for the related costs.
Car Insurance – Same as with your home, car insurance is important to keep current so there is coverage if the property is damaged. Also, car insurance is required by law in most areas. In addition to deciding who will be keeping an automobile and its related car payments, you need to decide who will be responsible for the automobile insurance.
Life Insurance – Life insurance is unique in that it can be a financial asset that has real cash value. Because of this, life insurance policies should be negotiated in the divorce settlements. Unlike other forms of insurance, life insurance is long-term and in many cases is meant to fulfill financial obligations like mortgages, alimony and college tuition for children. Establish who the beneficiary is on the policy, how cash value should be allotted and whether new life insurance policies are needed.
Health Insurance – If you currently receive health insurance through a spouse you are in danger of losing the insurance during a divorce. If your own employer offers health insurance coverage talk to your HR department about starting up a policy. On the flip side, if your employee benefits package is being used by your spouse you need to update your policy once the divorce is filed.
If you can’t get insurance through an employer you can still stay on your spouse’s group policy for up to 36 months using COBRA. However, you will be responsible for paying the premium.
Insurance affects many aspects of your life and financial well being. It’s crucial to establish insurance arrangements in the interim before everything is finalized. Talk to your attorney about what should be negotiated now as well as in the divorce settlements.
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Original Source: http://www.mybiginsurance.com/financial-assistance/handling-insurance-issues-during-a-divorce
