A change in life requires several changes in finances. The decision to have children or get married also requires a new decision in spending money and insurance policies. Of all changes, divorce is the toughest of them.
Divorce has a way of meddling with your financial account. The change is complex and tedious, affects us emotionally and physically, and implicates our finances and our kids. As you struggle emotionally and physically, insurance coverage is an aspect you must not neglect. It is best to go through insurance claims to know the changes effected by the divorce and how to bounce back.
There are some aspects of insurance that are basically affected during a divorce.
During a divorce and splitting of property, you’ll want the insurer to exchange ownership of the vehicle. The insurer will read policies concerning the car, especially when your spouse relocates. If your spouse is paying the insurance fee, the contact information has to be changed to the party paying.
Ensure your baby drivers are fully covered under the policies. Insurance also covers the household, but if the members are from different households, there will be a need to reinsure them under the parent's policy.
A divorce requires new home possession, or the insurer will split the possession equally among spouses. Typically, one partner always loses the house and relocates to a new residence.
However, the important aspect is to update the insurer about the new change in residence and possessions to keep you protected.
A spouse is usually covered under the higher-earning spouse’s health plan during a marriage. The employer usually sponsors this health plan. A law was enacted in 1986 called the Consolidated Omnibus Budget Reconciliation Act (COBRA); the law protects the lower-earning spouse by allowing them to remain under the ex-spouse’s health plan for at least three years.
COBRA is beneficial to those under the cover but at a disadvantage to the ex-spouse and the employer sponsoring the health plan. The method is not cost-effective and increases the premium payment. Also, it adds 2% to the administrative charges, and three years is a short-term solution for the receiver to get back on track.
Another option was enacted in 2010 called the Affordable Care Act, and the act creates an opportunity for people with no employer-sponsored health plan. Explore this and other options before settling for COBRA.
Life insurance should not be neglected during divorce, especially when spousal support is involved. Spousal divorce is terminated as soon as the payor dies. Most people depending on spousal support are encouraged to acquire other assets to substitute spousal support. One of the assets to acquire is life insurance.
If life insurance required becomes a settlement from the divorce, the recipient spouse should ensure the policies are changed and premium payments are made. The insurer should make the changes in your favor, and lapses should not go unnoticed.
Settle life insurance policies before the divorce is completed. There should be modification and agreement if the payor is uninsurable to avoid future complications. The case may be termed a marital asset if the payor is uninsurable.
Conclusion
Ensure all issues concerning insurance and other aspects are settled before finalizing the divorce. The new insurance policies should be straightforward and favorable to you. However, try to understand the existing policies and new policies that affect you due to the divorce.
Insurance can be tricky and have a variety of topics, and it is best to hire a certified insurance professional or financial advisor to oversee the situation.
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Tiffany Gaskin