Don't Divorce Your Insurance Agent
If you're facing divorce, you’re not alone. Divorce is a virtual epidemic in our country. In fact, 50 percent of first marriages, 67 percent of second marriages and 74 percent of third marriages now end in divorce, according to the Forest Institute of Professional Psychology in Springfield, Missouri.
Though this major life change can cause extreme psychological stress, its financial toll can also be exacting. During separation, difficult decisions must be made, like who gets which assets, how debts and liabilities will be split, and even who will pay for children’s education or care for elderly parents in the future.
Divorce and Insurance
But divorce also carries insurance implications. In fact, your insurance agent can be a valuable resource during this stressful time. With half of all first marriages failing—and the statistics going up from there—a wise, informed agent is your first line of defense in maintaining important protection when your family divides.
Before proceeding with the final paperwork, remember: You’re not divorcing your insurance agent. So consider the following insurance issues that accompany divorce and discuss them with your agent. By staying ahead of the game, you’ll be sure to cover all the bases, and shift your coverage to meet your changing needs.
Auto
Depending on how many cars you own, you and your spouse will need to decide who gets which vehicle. If car ownership changes when the divorce becomes final, you’ll need to alert your insurance agent to that fact so he or she can update your policy in your name.
Likewise, if you change jobs and wind up driving more or less than before, let your agent know, as how much you drive can affect auto insurance rates. Additionally, if you’ll be purchasing a new car, make sure your agent is aware of that ahead of time so you can get the coverage you need to protect that new investment.
Home
Along with divorce comes a change of address for one or both parties. Should you decide to move to a place of your own, give your agent your new address as soon as possible so he or she can recommend changes in home insurance coverage. Should you decide to move from an ownership to a rental situation, don’t forget to ask about renters insurance to protect the contents of your home and protect yourself from liability in case someone gets hurt in your new home.
Coverage amounts may also change, depending on which assets you’re awarded and which ones you give up. Let your agent know which are which so he or she can remove them from your policy and save you money on home insurance coverage.
Health
Unless you each have your own health insurance plan, your soon-to-be ex and you will need to decide how to cover yourselves and your children with health insurance from now on. If group insurance isn’t available through your job, or you aren’t currently employed outside the home, ask your insurance agent to help you find an affordable private health insurance plan.
Alternatively, if your spouse has better health benefits than you, you may want to consider requesting that he or she cover your children under that plan until they reach adulthood. However, make sure you don’t leave yourself vulnerable without adequate health coverage.
Life
If you and your spouse hold a joint life insurance policy, you’ll need to split off into a regular policy of your own. However, if you have children together and you’re not the primary caregiver, it may be wise to retain life insurance on your spouse too. This would protect you by helping to cover childcare-related expenses for a time if your ex passes away.
Since life insurance can be expensive, make sure the issue is addressed in the final divorce decree. This will help clarify who is financially responsible for paying the premiums and keeping the policy up to date. In addition, consider naming a trusted friend or family member as beneficiary so you know your children will be provided for if you pass away unexpectedly.
Long Term Care
When a parent or sibling becomes unable to care for themselves on a daily basis, long term care insurance helps cover the cost of hiring someone to assist them. When divorcing, consider the future, and designate money for expenses like these you may incur down the road with a long term care insurance policy.
As the cost of healthcare increases, so will the impact on your wallet when a loved one’s care becomes your responsibility. If you’re not sure whether or not you should purchase long term care insurance, or how much coverage you may need, your insurance agent can provide valuable assistance to help you make this critical decision.
