Life After Divorce: What You Need to Do Now with Your Insurance
If you are divorcing, now more than ever, you need to make sure that your finances are on the right track. You can then put the past behind you and set in place the building blocks that can be the foundation for your new financial future.
Review your insurance needs
Typically, insurance coverage for one or both spouses is negotiated as part of a divorce settlement. However, you may have additional insurance needs that go beyond that.
When it comes to health insurance, make having adequate coverage a priority. Unless your divorce settlement requires your spouse to provide you with health coverage, one option is to obtain temporary health insurance coverage (up to 36 months) through the Consolidated Omnibus Budget Reconciliation Act (COBRA). You also have options available as a result of the Affordable Care Act, but they are not without their own pitfalls, so shop carefully. Be sure to look into purchasing individual coverage or, if you’re employed, coverage through your employer.
Now that you’re on your own, you’ll also want to make sure that your disability and life insurance coverage matches your current needs. This is especially true if you are reentering the workforce or if you’re the custodial parent of your children.
Finally, make sure that your property insurance coverage is updated. Any applicable property insurance policies may need to be modified or rewritten in order to reflect property ownership changes that may have resulted from your divorce.
Change your beneficiary designations
After a divorce, you’ll want to change the beneficiary designations on any life insurance policies, retirement accounts, and bank or credit union accounts you may have in place. Keep in mind that a divorce settlement may require you to keep a former spouse as a beneficiary on a policy, in which case you cannot change the beneficiary designation.
Revise your estate plan
This is also a good time to make a will or update your existing one to reflect your new status. Make sure that your former spouse isn’t still named as a personal representative, successor trustee, beneficiary, or holder of a power of attorney in any of your estate planning documents.
Candace is the co-founder of SecondSaturday.com, an award winning seminar program for people contemplating or in the early process of divorce. Now forming in more that 70 communities in the U.S.