Many couples plan on getting life insurance and health benefits as a part of financial planning. Realistically, most couples place greater emphasis on negotiating child and spousal support payments while parting ways and neglect to focus on serious post-divorce reality – Insurance. This blog article’s intention is to highlight the importance of hammering out insurance plans post-divorce.
Life Insurance And Beneficiary Designation
Typically, life insurance is one of the most common types of security that couples purchase. Typically, the other spouse is the beneficiary of the insurance and then takes care of debts, maintenance of children, parenting responsibilities, and their own expenses through the death benefit or pay-out.
There is also the option of declaring your children as the beneficiaries of your insurance benefits, but you should keep in mind that the children cannot enjoy the proceeds of insurance coverage directly if they haven’t reached the age of 18.
Pro-tip: Always make sure that the beneficiary is irrevocable so that the beneficiary cannot be changed in the near future. An irrevocable beneficiary on insurance coverage cannot be changed without his or her consent. Ideally, in cases divorce and separation cases, the beneficiary designation should be made part of the separation agreement.
In acrimonious divorces or separations, the policy holders might name a third person as a direct beneficiary or beneficiary in trust for the children, usually a family member or friend instead of the remaining spouse.
Security Of Child’s Future And Spousal Support
It is fairly simple that the insurance proceeds can primarily be utilized by the uninsured spouse in the child or spousal support in untimely demise of the insured spouse. In divorce settlements, the courts usually issue orders for the spouses under financial obligations to get an insurance plan in order to secure the child and spousal payments.
In case the spouse does not have insurance coverage, he or she may be asked to acquire insurance coverage. If the spouse fails or does not have the means to obtain insurance coverage, then such a person may be ordered to give a lump-sum payment of either full or partial support amount to be paid.
Health Insurance
As compared to life insurance, a health insurance policy offers little pliability in the event of divorce or separation. If you are divorced or separated, you would probably be wondering if you are covered by the health benefits. A simple answer to this confusion is that the uninsured spouse will be terminated from the health coverage plan in the event of legal separation. Here are common instances that highlight how long you can be benefited from the health coverage;
- The health benefits continue for the uninsured or ex-spouse until the spousal support obligation completes.
- The uninsured may be kept under the insured’s health policy as long as the policy permits
- The benefits of a health insurance policy can be enjoyed by the uninsured spouse until and unless the divorce is finalized. This is more common in acrimonious divorces or separations.
- As far as children’s health expenses are concerned, they can retain the insured’s health policy until they have reached the age of 25 years, as long as they are full-time students
Get In Touch With Us
Undoubtedly, couples’ lives are stressful after divorce but the matter gets worse when couples share assets and are connected by insurance. It is, therefore, advised to engage the services of an experienced family lawyer who can address important financial considerations like life and health insurance over the course of a divorce.
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