Should You Demand Life Insurance in a Divorce Settlement?

Should You Demand Life Insurance in a Divorce Settlement?

A judge may order the providing spouse to maintain a life insurance policy to cover alimony or child support obligations to the recipient spouse as part of a divorce settlement.

The post Should You Demand Life Insurance in a Divorce Settlement? appeared first on Divorce Magazine.


health insurance after divorce

Health Insurance After Divorce: Here’s What You Need To Know

health insurance after divorce


It’s common in marriages for one spouse to obtain coverage for the entire family through their employer. Because one employer offers more attractive premiums or benefits, it makes sense to consolidate under one policy. After a divorce, children remain eligible for coverage as dependents, but the spouse no longer meets requirements to stay on the insurance plan.

If you’ve found yourself in the lurch as a result of a divorce, take heart. Adding the complication of finding health insurance during an already difficult time can seem overwhelming, but it’s critical your coverage doesn’t lapse. The stress of divorce can present many health complications and you’ll want to feel confident you can get the care you need.

Before detailing health insurance options, let’s cover a few standard terms so you’ll have a better understanding of how to compare plans and premiums.

What you need to know about health insurance after divorce

If this is your first foray into shopping for health insurance, there are a few terms you’ll need to know. Your ability to compare plans and make the best choice for you relies upon your understanding of industry terminology.

Premiums: Whether you use the coverage provided or not, this is the amount you pay every month or every pay period to retain health insurance coverage. If you have insurance through your employer, they likely subsidize this amount so your premiums may appear artificially lower.

Out-of-pocket: This is the cost you are responsible for paying to the provider for the services you receive in addition to the amount your health insurance covers.

Deductible: Some policies have deductibles which are out-of-pocket spending thresholds you must reach before certain insurance benefits kick in.

There are many kinds of health insurance, and some even involve wellness plans to lower premiums or flex spending accounts to offset out-of-pocket costs. As you shop, you’ll discover that plans with high deductibles may offer lower premiums and less out-of-pocket costs.

Your options for health insurance after a divorce

Before you finalize the divorce, make sure you have a plan in place for health insurance coverage. If you’re currently separated, you’re still eligible for health insurance through your spouse’s policy. Once the divorce decree is filed, you need to notify the health plan administrator within 60 days to be eligible for certain kinds of coverage such as COBRA.

Here are four options for securing health care coverage if you’re no longer eligible under your current plan due to divorce.

1. Get insurance through your employer

If you’re eligible for health insurance through your own employer, this is going to be hands-down the cheapest way to secure coverage. Employers often subsidize the cost of insurance so your premiums will usually be lower than anything you could obtain as an individual. While there are strict employee open enrollment periods, you can generally add coverage if you have proof of a life-changing event such as divorce.

2. Use COBRA or mini-COBRA

A federal law nicknamed COBRA (Consolidated Omnibus Budget Reconciliation Act) ensures that any company with more than 20 employees must offer coverage if you’re no longer eligible through your spouse’s policy. This coverage has two major stipulations, however. One is that you must notify the plan administrator within 60 days of the divorce or you won’t be eligible. Secondly, COBRA coverage is only available for 36 months, so it’s more of a contingency plan than a long-term solution.

COBRA has advantages for those who are concerned about keeping the same provider, but it’s more expensive than other health insurance options. While the employer is obligated to offer the coverage, they no longer subsidize it, so you’ll end up paying the full cost of the premium plus an administration fee.

State continuation coverage sometimes referred to as mini-COBRA, is designed to supply health insurance options to those whose policy sits with a small company that has less than 20 employees. In some states, coverage only lasts three months while other states provide options that could cover you until Medicare eligibility kicks in. Because coverage and eligibility differ wildly from state to state, you’ll need to do a little research to determine if this is a viable option for you.

3. Buy insurance in the marketplace

Due to the ACA (Affordable Care Act) and subsequent reforms, you can now purchase healthcare as an individual and, depending on your income, these plans may be subsidized. There are both government and off-exchange or direct platforms for applying, comparing, and purchasing plans that eliminate broker fees and deal directly with health insurance providers.

The most popular option is to secure coverage through the federal healthcare exchange, which rates plans in the marketplace as Bronze, Silver, Gold, Platinum, and Catastrophic according to the amount of coverage. Open enrollment for the marketplaces is typically November 1st through December 15th but, like employer-sponsored plans, qualifying events such as divorce provide a special enrollment window of 60 days.

4. See if you qualify for Medicare

Medicare is a health insurance plan offered through the federal government for people 65 and older and certain people with disabilities. There are several different levels of coverage through Medicare (Plan A, B, C, and D), and your eligibility will be based on a few factors. These include age, marital status, length of employment, and social security eligibility. In some cases, Medicare and Medicaid can be used simultaneously to provide more comprehensive coverage.

Navigating Medicare eligibility and enrollment can be tricky, so it’s best to consult directly with representatives at Medicare about which options would work best for your situation.

Divorce can be a stressful time, so in addition to securing health insurance, make sure to set aside time to take care of yourself. Stay up to date on yearly check-ups and invest in preventative care. Staying in good health means you’ll be able to enjoy the benefits of the new life you’re building and have the energy to take on whatever opportunities come your way.

The post Health Insurance After Divorce: Here’s What You Need To Know appeared first on Divorced Moms.


divorce and life insurance

Getting Divorced? Don’t Forget about Life Insurance

divorce and life insurance


If you’re a divorced woman, chances are you’ve got a lot on your plate right now. The chaotic and difficult process of getting divorced means you’ll spend lots of time weeding through the marital assets, separating finances, and sorting out vital things like custody of children. Getting financially stable after a divorce is no easy feat, and there are lots to manage.

One area many divorcing couples overlook is life insurance. As a divorced woman, the challenges addressed by securing life insurance are two-fold. First and foremost, any existing policies will need to be adjusted to change beneficiaries and ensure the protection of child support or alimony payments. Secondly, you’ll need to consider the best kind of life insurance policy for your situation and how much coverage you’ll need moving forward.

Here are a few items to add to your to-do list as a divorcee to ensure you and any dependents are financially protected, both in the short term and the foreseeable future.

Getting Divorced? Don’t Forget about Life Insurance

Changing Beneficiaries

When you were married, your spouse was probably listed as the primary beneficiary on your life insurance policy. After all, the entire point of life insurance is to shelter your family and loved ones if your income is lost through a tragic death. A life insurance policy is a crucial contingency plan for meeting financial obligations like mortgages, car payments, and putting food on the table.

After a divorce, much of that calculus changes. If you are divorced without children, chances are you’re not keen to see your spouse benefit on the event of your demise. No matter your marital status, life insurance companies don’t dispute who receives payouts on a policy. For the company, it’s a simple contract between the insurance carrier and the policyholder. The beneficiary is whomever you documented when you took out the policy, and that won’t change unless you file a specific request with the company.

Changing beneficiaries is usually a straightforward process of contacting your life insurance carrier. Unless you have a policy with irrevocable beneficiaries, you can specify someone new to receive the payout upon your death with minimal paperwork and fuss. Some insurance carriers provide ways to accomplish this online, while others require going through a broker or submitting notarized documentation.

And remember, life insurance isn’t the only thing you’ll need to update. Remember to switch over other insurance policies, including health, home, and auto insurance. It’s also essential to change the beneficiaries in any legal documentation that might survive you, like a will and a power of attorney.

Policies with Cash Value

Some permanent life insurance policies, such as whole life or universal life policies, accumulate cash value. As you pay premiums, a portion of the money goes into an investment fund that can expand as the stocks rise. If you’ve had such a policy and recently divorced, you probably discovered the balance in that fund is considered part of the marital assets. You’ll typically have two options—keep the policy and continue paying premiums or cash out and divide the spoils.

For typical term life insurance policies, no payout is made until death occurs or the policy period expires. However, for whole and universal life insurance policies, you can choose to decline any potential death benefit in lieu of taking the current cash value of the policy. Therefore, these kinds of permanent life insurance policies are considered part of your net worth as a couple and get divided as assets during the divorce settlement accordingly.

You may also want to speak to a financial advisor in addition to your divorce attorney before making any critical decisions about dissolving or dividing assets. Financial experts can give you advice about how to handle transitioning not only insurance policies but also other assets like 401(k) and retirement plans in a way that’s equitable for both spouses and avoids tax penalties.

Protect Your Income

When you get divorced, life insurance isn’t solely about covering your lost income for the dependents you leave behind. It’s also about replacing any potential child support or alimony payments if you or your former spouse should die. For the parent who retains primary custody after a divorce, a life insurance policy is a crucial safety net that can cover the costs associated with raising children, including future financial necessities like supporting them through college.

There are several ways to handle securing life insurance coverage on your former spouse. Some couples choose to make the stipulations about the policy and premiums part of the divorce decree. The court may even order the head of the household to take out a life insurance policy as part of the settlement. In cases where the court requires a spouse to maintain a life insurance policy after divorce, the coverage and duration mandated usually reflect the obligation. For example, if the life insurance is intended to cover a significant loss of income and child support for the custodial parent, the policy term will usually need to extend until the dependents are 18 or 21.

Financial Security for Children

If you carried a life insurance policy during the marriage to provide for your children in the event of a death, that need still exists. Plus, in an acrimonious divorce, things don’t always work out according to plan. If you have concerns about whether your former spouse will follow-through on making payments, take control of the life insurance policy yourself and pay the premiums to avoid any risk of coverage lapse. Even if the coverage was specified as part of your divorce decree, it may take time and significant hassle to get follow through on those stipulations enforced by the court. In the interim, you want the assurance that your policy is paid up and your coverage current.

When you’re raising children as a single parent, protecting your own income becomes doubly important after a divorce. In the event of your death, while arrangements may be made for someone you trust to care for your children, you’ll still want them to enjoy financial security through a generous life insurance benefit. The simplest way to calculate how much life insurance coverage you’ll need is to take the number of years until your child turns 18 or 21, then multiply it by your annual income. That amount is the bare minimum of insurance coverage you should be securing per child.

You can name your child as a beneficiary, but be aware that policies typically don’t pay out to a dependent under the age of majority. Instead, the court will appoint a custodian, usually the surviving parent, to supervise holding the funds in an account until your child is of age. If you don’t want your former spouse to be appointed by the court, specify a custodian as part of the policy.

A Word of Warning

If you’re still in the process of finalizing a divorce or in the beginning stages of filing for one, consult with your divorce attorney before taking any action. In most cases, assets are frozen during the process of a divorce and both parties are required to be fully transparent about any financial obligations, including insurance policies. Changing beneficiaries or coverage during divorce proceedings could raise red flags and unnecessarily prolong and complicate your settlement.

You should, however, do your research and be prepared to suggest any policy changes or premiums you want specified as part of the divorce decree. While divorce can be a painful process, it’s also an opportunity to take charge of your financial future and secure stability for both yourself and your dependents.

The post Getting Divorced? Don’t Forget about Life Insurance appeared first on Divorced Moms.


Securing a Divorce Court Settlement With Life Insurance

Securing a Divorce Court Settlement With Life Insurance

While the dynamics are different in divorce, it does not change the fact that life insurance is still a must when a divorce settlement is inevitable. Without proper coverage, you may not be able to maintain your lifestyle or support your children when your ex passes away.

The post Securing a Divorce Court Settlement With Life Insurance appeared first on Divorce Magazine.