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The impact of divorce on insurance coverages

On Behalf of | Aug 18, 2021 | Divorce

When people head down the path of divorce, it is often strong emotions that motivate them. The pragmatic financial considerations that were a part of the foundation of the marriage are also equally part of the divorce. Unfortunately, those overpowering emotions can cloud the practical necessities that both parties must sort out when setting a course for the future.

One important part of this involves insurance coverages. Neglecting discussions about them can have serious consequences for both spouses and their children. For Evansville and Southern Indiana residents, finding out more about these and other concerns that may come up during the divorce process can help to ensure a measure of security once the dust has settled.

Conversations about insurance coverage during property division

Whether the divorce is amicable or not, spouses must be aware of the various insurance policies they have when listing assets and liabilities as part of the marital property, and discuss the best plan moving forward. As Indiana is an equitable division state, the court determines property division or approves a divorce settlement based on what it considers is a fair, but not necessarily equal, division.

When discussing current insurance policies and what changes to make, couples should consider:

  • Auto insurance and who should get which car. The details of a change in address, who will drive each car and the amount or type of driving will affect coverage, and removing an ex-spouse from a policy protects you from liability if they get into an accident.
  • Home insurance, which will mean a change of address for one or both parties. Special coverages for valuables may change, and changes in security for the home will affect coverage. If one spouse moves to a rental property, they may need renter’s insurance.
  • Life insurance policies of couples generally list each other as beneficiaries. In the heat of the moment, one spouse may consider changing this. There may be good reasons to leave them as is, so if the ex who is paying child support or alimony dies, or if the custodial parent passes away, the coverage will continue to support the family and take care of the children.
  • Health insurance, which will affect coverage if one spouse and the children on the other’s policy. In Indiana, COBRA benefits will apply in the event of divorce for the spouse and children of a covered employee for up to 36 months if provided timely notification. The divorce decree should include the financial sources that will pay for these premiums.

In addition, couples need to fully understand the cost and necessity of continuing disability and long-term care insurance as part of financial planning post-divorce.