Not to be rude and bring up 2020, but before we can put the year fully behind us and move on for good, you’ve got one last task to tackle—filing your 2020 taxes. With the deadline to file coming up on...
Divorce is one of the most unpleasant things to have to go through in life. Even if you are the partner who initiates the divorce, the orchestration of it can be extremely taxing. And, while you’re navigating through the thorny jungle of splitting up an entity and becoming a single unit again, it can be hard to remember some of the secondary items that need to be taken care of, and updating your insurance can be one of those. Here are some things to remember about your insurance as you go through a divorce.
Update Your Life Insurance
Your life insurance is one of the first things you should consider updating once you separate from your spouse. Here are a few things to consider:
When going through a divorce, one of the first things to consider is renaming a beneficiary on your life insurance. If your ex-partner remains your beneficiary and you encounter your untimely death, your life insurance payout will go to him or her regardless of what’s indicated in your will. Once you decide to separate, be sure to decide if it would be best to name a new beneficiary.
If you are dependent on your ex-spouse for alimony or child-support, it’s in your best interest to take out a life insurance policy on your ex-spouse. This is a form of income protection to ensure that you will still receive payments in the event of your ex-spouse’s death.
Get a Separate Auto Policy
Separating liability is crucial when it comes to auto insurance. To do so, you'll need to obtain separate policies. If you fail to separate your policies and continue to stay on your ex-partner’s car insurance for a car that you don’t drive, you will have vicarious liability. This means that you may be held liable for any incidents that occur with the car. In addition, if you continue to stay on your ex-partner’s auto policy and he/she has a lapse in coverage, you will incur a penalty since you will still be considered liable.
Consider the Need for Disability Insurance
If you depend on alimony and/or child support payments from your ex-spouse, you’ll need to ensure that he/she has disability insurance. Disability insurance ensures you still get paid a portion of your income if you cannot work due to an illness or injury. If you know you will be dependent on your ex-spouse for alimony, and/or child support payments, it is crucial that he/she has disability insurance. That way, if he/she does become disabled and is unable to work for a period of time, you and your family will have income protection. Consider mandating this in your divorce agreement.
Maintain Your Own Health Insurance Coverage
Going through a divorce can cause a lot of mental and physical distress. That's why having health insurance is imperative now more than ever. If you have your own insurance, that’s great; you can keep your insurance and continue your coverage. However, if you’re a dependent on your ex-partner’s plan, you cannot stay on his or her plan. But, there are a few options you can choose from to ensure you remain covered:
Sign up for your employer’s insurance:
If your employer offers an insurance plan, the easiest thing to do is to take advantage of that. You’re able to sign up for your company’s insurance outside of the typical enrollment period if you can prove that you’ve lost coverage from another source.
You can buy a policy directly from a health insurance company or from the Health Insurance Marketplace.
COBRA insurance is named after the federal Consolidated Omnibus Budget Reconciliation Act, and it allows you to keep the coverage you had through your ex-spouse’s plan, but with the stipulation that you pay for it yourself. You can elect to purchase COBRA for up to 36 months. For more information on COBRA, speak to the benefits specialist at your ex-spouse's place of work.
Update the Name on Your Homeowners Policy
Divorce means separation, and separation means at least one of you will leave your place of residence. When that happens, your homeowners insurance will need to be updated to reflect the change. The policy should be moved into the name of whoever keeps the house. If both of your names are on the original policy, you both must agree to the name change. Whoever moves out will need to obtain their own homeowners or renters insurance policy.
Divorces are taxing, and it can be easy to forget everything that you need to update following a divorce. But ensuring that you update your insurance will help keep you and your family protected for years to come.
As Executive Vice President, B2C Channel Development, Tyreo Harrison enables referral partners and financial institutions to offer personal, commercial and surplus lines insurance products to increase non-interest income, improve borrower retention and add value to their service offering. He maintains his General Lines Agent Licenses for Property and Casualty, Life, Accident, Health, and HMO. He is a graduate of the North San Antonio Chamber of Commerce Leadership Lab and in 2008 was named as one of the San Antonio Business Journal’s “40 Under 40” Rising Stars. Prior to joining SWBC in 2005, Tyreo played professional football for the Philadelphia Eagles and Green Bay Packers.