Divorce: Effect on Insurance Policies
Divorce presents a number of critical financial and emotional issues. Among the more complicated financial issues are those relating to insurance. Health, car, homeowner, and property insurance are a few of the common types of insurance that can be viewed as assets in a marriage. Upon divorce, the responsibility and expense of maintaining appropriate policies through payment of premiums must be taken into account. Payment of premiums on such policies can be part of the divorce settlement. Following is a discussion of divorce and its effect on insurance policies.
After Divorce: Does Coverage Continue?
Federal laws regulating health and other types of federally regulated insurance may allow partners in a marriage to continue the policies after divorce. These regulations require that insurers continue coverage for up to 36 months before the insureds are required to apply for independent coverage. Beyond meeting the expense of premiums during this interim period, it may be necessary to assess whether or not a former spouse will be able to qualify for coverage at the end of the COBRA-mandated period.
Pre-existing health conditions or disabilities may make it impossible for a former spouse to obtain independent coverage, necessitating negotiation of adequate provisions to meet such expenses beyond a COBRA-mandated period. Conditional provisions, with accompanying insurance arrangements, may also be advised to protect against potential changes in health or disability conditions.
Often people may also carry long-term care policies or have insurance policies as part of their retirement portfolios. Accounting for such assets, equitably dividing such assets and providing for continuation of such coverage are increasingly important in divorce settlements. This is not only because younger people are beginning to anticipate and provide for such needs earlier in life. It also occurs because divorce affects couples of all ages and, not uncommonly, even marital unions of many decades' duration.
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