Here’s a breakdown of what to do.
|Insurance checklist for a divorce|
|Home and renters insurance||
You can keep your health insurance. But if you’re a dependent on a spouse’s workplace plan, in most states you’ll have to start paying the full bill for that insurance. Or you’ll have to buy different coverage. (The kids can stay on either parent’s plan as dependents.)
What to do if you’re a dependent on a soon-to-be-ex-spouse’s health plan:
|Option||Good to know|
|Enroll in a plan at your workplace.||
|Keep the coverage through the ex-spouse’s workplace plan and pay for it.||
|Buy a health plan on the government health insurance market.||
|Buy a health plan outside of the health insurance marketplace.||
|Low income? Check to see if you qualify for Medicaid.||
“Health insurance is a big component of expenses that really need to be projected and thought through when someone is moving toward a divorce settlement,” says Cheryl Glazer, president of the Association of Divorce Financial Planners and a financial consultant in Philadelphia.
As you weigh health plan choices, understand the benefits of each and the out-of-pocket costs such as deductibles, copayments and coinsurance. Making apples-to-apples comparisons among health plans takes time, and you may need help, she says.
|Where to find help choosing a health plan|
|Buying a marketplace plan||Check Healthcare.gov for the health insurance marketplace in your state|
|Buying a health plan outside the marketplace||Health insurance agent. Some agents sell coverage from a single company; others sell plans offered by a variety of companies.|
|Signing up for coverage at work||Your employer’s human resources or employee benefits department|
Notify the insurance company about changes, such as moving during the separation. Car insurance rates are based in part on where the car is garaged. Once the property is divided, both ex-spouses will need their own car insurance policies.
“When buying a policy, look at the details that are behind the front page,” says Chris Chen, a certified financial planner with Insight FInancial Strategists in Waltham, Massachusetts. He is also treasurer of the Association of Divorce Financial Planners.
Teen drivers? Both parents may need to list the kids on their policies if they share custody. That’s because the teens will likely regularly drive both parents’ cars. Call the insurer to find out.
Some ex-spouses jointly own the family home after the divorce, usually to accommodate the kids until they finish school, Chen says. In that case, both should be listed on the home insurance policy. Contact the home insurance company to remove an ex-spouse if you become the sole owner.
Renting a new place? Consider buying renters insurance, which covers belongings and provides liability insurance. Even if you’re still named on the family home insurance policy, that coverage won’t extend to an apartment.
Life insurance is often required in a divorce agreement when child support or alimony payments are involved. The life insurance replaces this money if the ex-spouse who makes the payments dies prematurely.
Buy individual life insurance rather than depending on group coverage through work, Chen says. Employer-sponsored life insurance typically ends when you leave a job, and it may not offer enough coverage anyway.
Chen says it’s best for the beneficiary to own the policy insuring the ex-spouse. The policy owner pays the premiums and has control over the policy. This way, you never have to worry about an ex-spouse “forgetting” to pay the premiums or changing the beneficiary.
Review beneficiaries on life insurance and other financial accounts, and change them if necessary.
Disability insurance replaces a portion of income if you become disabled or sick and can’t work for an extended period. The coverage is important, but often overlooked, Chen says.
The chance of disability is higher than you might think:
- A healthy 35-year-old man with an office job has about a 20% chance of becoming disabled for three months or longer during his career
- A healthy 35-year-old woman office worker has about a 25% chance
- The chances rise to 45% for the man and 41% for the woman if they smoke and are overweight, according to the Council for Disability Awareness, an insurance trade group
Back injuries, cancer and heart disease are common causes of long-term work absences. Some employers offer disability insurance, or you can buy individual coverage from an insurance company.
Source author: BARBARA MARQUAND