Obtaining the proper insurance coverage after a divorce

If you’re going through a divorce, there’s probably a lot on your mind. It’s a difficult time with a lot to consider, and ensuring that you’re properly covered by insurance can easily be overlooked. But divorce does require a careful reassessment of your insurance coverage to help you stay protected against financial risks. If you’re recently divorced, or going through a divorce, here are some steps you may consider taking to help ensure you have the insurance you need.

Auto insurance

A change in vehicle ownership may require changes to your car insurance coverage. If you have your former spouse on your auto policy, you should consider removing them to protect yourself against potential liability, and prevent their name from appearing on any future claim checks. You should also notify your insurance company of any address changes.

Home insurance

If a divorce finds you renting a new residence, consider getting renter’s insurance. If you’re staying in your current home, consider removing your ex-spouse’s name from the policy, and changing property coverage if, for instance, your former spouse is taking jewelry or other items of value from the premises.

Life insurance

Life insurance can play several financial roles. Chief among them is to help cover financial obligations in the event of a spouse’s death. Life insurance is often a key element of a divorce agreement, in that it helps protect against the loss of alimony income or child support should your former spouse die prematurely. If you own a policy underwritten while you were married, be sure to review and update your beneficiary information.

Depending upon the type of financial product and the state you live in, a divorce may not automatically remove your ex-spouse as a beneficiary. You may want to consider changing beneficiary designations after a divorce, especially if you remarry. If you forget to change the beneficiary on your life insurance or annuity, your new spouse might not receive those assets even if your will states you want everything to go to them.

Disability insurance

If you or your ex-spouse were unable to work because of illness or injury, it could impact you both. If you were to become disabled, you’d need to find a way to pay your routine expenses, such as your mortgage, phone bill, loan payments, etc. — disability insurance can help with that. If your ex-spouse pays you alimony or child support and they were to become disabled, that could significantly impact your finances as well. Make sure you have adequate income protection for yourself; in addition, you may want to request that your ex-spouse maintain a policy too as part of your divorce agreement.

Health insurance

Health coverage for your children is a typical element of any divorce agreement. If you’re required to cover your children and they’re currently covered by your former spouse’s employer group plan, you may want to contact the employer to continue coverage under COBRA. If you have an individual policy, you may need to add your children to the policy. Whatever your situation may be, make sure you’re not duplicating coverage for your children.

Divorce can be a stressful time in your life, but taking the right steps to protect your financial future can increase your happiness. Our research shows that solid long-term financial habits can have up to a 30% greater influence on an individual’s happiness and confidence than income.¹ By reviewing your insurance coverage and making any necessary changes, you can help set yourself up for a more confident next chapter.