Divorce-Related Insurance Issues

When couples divorce or separate, one of the last matters that comes to mind is their joint insurance policies. But, splitting up usually means each party must make several insurance-related decisions.

* Car insurance: Some couples may choose to keep their vehicles under the same insurance policy. Whether the divorcing couple takes out separate policies or they keep the same policy, they need to notify their insurance company or agent. There will likely be a change of address and in the registered owners of the cars, so rates will change and the driver information must be up-to-date with the insurer. When couples split up, at least one of the former spouses will almost always move to a different residence. The change in address may impact the auto insurance rates, as well.

* Home insurance: When the divorce becomes final, the homeowners policy may need to be changed to delete a former spouse who no longer has an insurable interest in the home. If one of the parties moves to a rental unit, he or she should look into rental insurance to make sure personal items are covered.

* Life insurance: Some ex-spouses will actually continue as the beneficiary on each other's life insurance policy. This is usually a pretty good idea if the couple has younger children who may need financial assistance if one of their parents passes away. In addition, some life insurance policies have signficant cash value. This may become an asset that requires some negotiation during the divorce settlement.

* Health insurance: It will be important to look into your healthcare insurance plan. Oftentimes the family insurance comes from one spouse's employer. Those covered under the policy may change as a result of a separation or divorce.