No one likes to think that it will happen to them but with a 50% divorce rate, it is happening to a lot of us. The last thing you want to think about while you are divvying up your life is insurance, but it should be at the top of your to do list. In order to ensure you are protected during and after the divorce, you will need to review and make changes to the insurance policies you have individually and together. Here are 5 of the most common ways getting divorced impacts your insurance.
Policies that Protect Home and Property
These are your homeowner’s policy or your renter’s policy and provide coverage for damage to your home and/or loss or damage to personal property. Odds are that at least one person is changing residences as a result of the divorce and when they leave, they will be taking property with them. It is a good idea to reassess your homeowner’s or renter’s policy to ensure you still need all the coverage you have. For example, if you have a rider that covers an expensive piece of art you may no longer need that rider or to pay for the additional coverage if your former spouse is taking the art. If you are moving from a home you own to a rented space, you will want to switch your homeowner’s policy for a rental policy.
Policies that Protect Your Cars
There will definitely be changes to your auto policy unless one of you doesn’t drive. At a minimum, the policy will need to be changed so that it only includes you as an authorized driver. If you have more than one car, the coverage for any vehicles you no longer own can be removed as well which will save you money. Don’t wait to make these changes. As long as you are both listed on the policy, you are both liable for any claims against that policy.
Policies that Cover Your Life
Most people think that one of your first insurance changes you would want to make would be to your life insurance. You don’t want to take the chance that something happens to you and your former spouse gets your life insurance payout. However, there are several reasons why you may not want to make any changes to your life insurance as part of the divorce. First, if you have children, you may want your life insurance proceeds to go to your spouse because they will be the primary caretakers for your children. Second, if your spouse is paying alimony and child support and something happens to them, life insurance proceeds can help replace that lost resource. One change you may consider is changing these policies, the ones meant to provide for the care and raising of children, from whole life policies to term policies. This would enable you to provide means for their care until they are old enough to care for themselves without having to pay premiums for life.
If you are unsure about the insurance implications of your divorce, work with your agent. They can help you determine what insurance you need going forward and what changes you need to make in order to have the amount of protection that works for you.
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