Divorce is like hitting the reset button on a lot of things—your finances, your living situation, even your day-to-day routines. But one area that often gets overlooked during the chaos of separation is insurance. Whether it’s health, life, home, or car insurance, divorce can create a ripple effect on your policies. An insurance overhaul is not just a box to check; it’s key to protecting yourself and your assets moving forward.
Let’s break down the different types of insurance you’ll need to revisit after a divorce, why it matters, and how to make sure you’re fully protected.
1. Health Insurance: Don’t Get Caught Without Coverage
Health insurance is one of the first things that gets impacted by a divorce, especially if you were covered under your spouse’s plan. When the marriage is over, so is your access to that coverage. But you don’t want to go without health insurance—not even for a short period.
What to do:
- COBRA: After a divorce, you may be eligible to continue coverage through your ex’s employer-sponsored health insurance under COBRA (Consolidated Omnibus Budget Reconciliation Act). While this allows you to stay on the same plan, keep in mind that it can be pricey since you’ll be responsible for the full premium.
- Marketplace Plans: If COBRA isn’t an option or feels too expensive, check out the health insurance marketplace (Healthcare.gov). A divorce is considered a qualifying life event, which means you can shop for a plan outside of the usual enrollment periods.
- Employer-Sponsored Plans: If you have your own job, now’s the time to make sure you’re enrolled in your employer’s health plan. Like with marketplace insurance, divorce allows for a special enrollment period to get new coverage.
2. Life Insurance: Revisiting Your Beneficiaries
Life insurance can become a little tricky post-divorce, especially if your ex is still listed as your primary beneficiary. Most people don’t want their ex-spouse to benefit financially from their death, so this is a must-change area. On the flip side, if you have kids, you’ll need to ensure they’re taken care of in the event of your passing.
What to do:
- Update Beneficiaries: Change your beneficiary from your ex-spouse to someone else—whether that’s your children (though you might need to appoint a trustee or guardian), a sibling, or a trusted friend.
- Adjust Policy Coverage: Your life insurance needs may shift after divorce. If you were the primary earner, you may need more coverage to protect your children’s future financial needs, especially if child support or alimony is part of the equation.
- Review Policies for Alimony or Child Support: If your divorce agreement includes alimony or child support, you might be required to maintain life insurance to secure those payments in the event of your death. Make sure you know the terms and update the policy accordingly.
3. Homeowners or Renters Insurance: Is the House Still Covered?
When it comes to your home, the insurance situation can get a little murky, especially if one spouse keeps the family home or you’re transitioning to a new place. It’s crucial to ensure the property is properly insured, whether you’re staying put or moving out.
What to do:
- If You’re Staying in the Home: Update the homeowners insurance policy to reflect your name only, removing your ex-spouse if necessary. Review the coverage to make sure it still fits your needs, especially if the mortgage or property taxes have changed.
- If You’re Moving: Whether you’re renting or buying, make sure you get homeowners or renters insurance for your new place. If you’re renting, a renters insurance policy will cover your personal belongings in case of theft, fire, or other damages.
- Clarify Liability: If you and your ex are co-owners of any property, you’ll want to clarify who is responsible for insurance coverage until the property is sold or transferred to one party.
4. Auto Insurance: Driving Forward Solo
Your car insurance might not be top of mind during a divorce, but it’s something that needs attention, especially if you’re moving off a joint policy. Divorce will mean untangling your finances, and auto insurance is no exception.
What to do:
- Separate Policies: If you and your ex had a joint auto insurance policy, it’s time to go your separate ways here, too. You’ll need to establish a new individual policy for yourself. Keep in mind that separating policies might affect your premiums, so be prepared for that adjustment.
- Update Titles and Registration: Make sure the title and registration are solely in your name if you’re keeping the car. Also, inform your insurer of the change and confirm that the policy reflects the new ownership.
- Shop for New Rates: Don’t just roll over your old policy into a new one—take this opportunity to shop around for better rates. Divorce can change your financial picture, and you may find more affordable coverage if you look at your options.
5. Disability Insurance: Safeguarding Your Income
Divorce often means shifting financial responsibilities, and if you’re relying on your income to support yourself and your children, disability insurance becomes even more crucial. This type of insurance protects your income in case you’re unable to work due to illness or injury.
What to do:
- Check Coverage: If you have disability insurance through your employer, make sure you’re covered adequately for your new financial situation. If you don’t have this insurance, now is a good time to consider it, especially if you’re the primary breadwinner.
- Recalculate Needs: With new financial obligations, you might need more coverage than before. Calculate what’s needed to maintain your lifestyle if you’re unable to work for an extended period.
6. Umbrella Insurance: Extra Coverage for Extra Protection
If you have significant assets—whether it’s property, investments, or savings—you might want to consider an umbrella insurance policy. Umbrella insurance provides additional liability protection on top of your homeowners and auto policies, safeguarding your assets from major claims or lawsuits.
What to do:
- Review Asset Protection: After divorce, your assets may be more vulnerable. If you’ve received property or investments in the settlement, umbrella insurance can offer an extra layer of protection.
- Adjust Limits: Make sure the coverage limits on your umbrella policy reflect your new financial situation. You may need more or less coverage depending on how your assets were divided.
Divorce is a major life transition, and while it can feel overwhelming to think about the logistical details, insurance is one area you can’t afford to ignore. It’s not just about updating paperwork—it’s about ensuring you’re protected as you move forward. By taking the time to overhaul your insurance, you can safeguard yourself and your assets, leaving you better prepared for the next chapter.
And remember, when in doubt, consult with a financial advisor or insurance expert to make sure all your bases are covered. You’ve got this!
