Divorce: What To Do About Medical, Life, Homeowners, and Auto Insurance!

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Did you know that your life insurance policy could still cover your ex even if you two are divorced and no longer wish to be a part of each other's lives?  Life Insurance policies have a lot of fine print when it comes to divorce. You don't want to ignore your life insurance decisions because you may end up paying more than you could ever imagine. 

The laws are different for every state. You will want to check out how the laws apply because you may find yourself in the middle of some expensive complications. If you have a good attorney, you should be able to protect yourself. 

Life insurance can involve a lot of money. You will want to make sure you know exactly what it is that you are signing. In the case of a pending divorce,  you will want to talk to your attorney and your insurance agent right away to arrange to get  your spouse off your policy as soon as the papers are filed.

Some states make life insurance policies invalid as soon as the divorce goes through. In other states, you may also need to replace your policy or get a change in the policy. You can take your ex off and place your children or others as the beneficiary. Changing your beneficiary is not difficult and can be done within minutes.

You need to consider who pays the premium. If your husband does, he can stop paying or cash in the policy and leave you with nothing. Life insurance should be a part of the divorce settlement negotiations.

To protect the children, make sure that your divorce states that they are kept as the beneficiary and make sure that your spouse shows proof of it each year. If your spouse allows the policy to lapse, your ex may not have to reinstate it unless ordered by the court. 

If you would like your children to benefit financially from your life insurance policy, you will want to open a trust fund and then name the trust as the beneficiary to handle the proceeds. This way your ex will never see any of the money.

You can block your children from giving any of the money to your ex by setting up the trust fund and stipulate that they cannot receive any of the money until they are young adults. The normal age of legal maturity for such trusts ranges from 18 to 21. 

You also need to think about the medical insurance. In some states you can stay on the medical insurance policy for 36 months after the divorce is final. Each child can be covered until they are adults. You also need to negotiate how medical insurance premiums are to be paid and if paid by you or your spouse or perhaps split between you.

If you get the primary residence in the settlement, you could face some surprises. The things that are covered in your Homeowners Insurance may only be reimbursed to the person named as primary beneficiary on the policy.

Therefore, if your spouse has the insurance in their name, then the value of your personal property will not be reimbursed to you if a fire or other damage happens. Your spouse will get the money for everything.

If you are the one moving out, make sure that you take everything that you value and that is permitted in the settlement. You will want to take anything that you would miss if you were unable to recover it.  

Jim DeSantis is a retired Pastoral Counselor providing a free ebook to help save marriages. Download Save Your Marriage - here! No email or signup is required. It's an instant PDF download.

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