Divorcing? Think About Necessary Changes to Insurance
Although it’s usually the “bigger picture” items between divorcing spouses that garner most of the focus, there are many smaller details that must be attended to as well. Many of these can be easily overlooked.
For example, parties who are in the process of divorcing should review their existing arrangements in connection with their various insurance policies, in order to update the information on record with the insurer, to change/add new insurance, and to change beneficiaries as needed. This applies to many different types of insurance, such as automobile insurance, homeowner’s or tenant’s insurance, life insurance, and group benefits through employment.
The most obvious among these relates to existing homeowner’s insurance on the former matrimonial home; if that home has been sold then the ex-spouses will have to obtain separate coverage for their respective new residences. This may involve obtaining tenant’s insurance if a former spouse’s post-divorce accommodation is a rental.
Changes to automobile insurance policies will likewise be required. Individual insurance may have to be arranged, and any young drivers must be added to the policies of the parents with whom they live after divorce. If the parents share custody and their children have access to both parents’ vehicles, then consideration should be given to adding these young drivers to both policies.
Comparatively speaking, life insurance may not have to be altered to any great extent, other than to change the beneficiary designation from the former spouse. (However, where one ex-spouse is paying support to the other, it may be wise to keep the recipient ex-spouse as the designated beneficiary to that the funds become available to him or her for support purposes, in the case of the death of the insured ex-spouse). Employment-related group health or dental coverage may also have to be updated post-divorce to reflect the fact that legally the insured no longer has a spouse who is eligible for such benefits.
With that said, it is important to know that if the spouses are merely separated (i.e. have not yet divorced) then making the necessary changes to a joint policy can involve an added consideration: they must both consent to it. For example, if both separated spouses are “named insureds” on a policy of insurance, then the policy cannot be cancelled or changed, nor can one separated spouse be removed, unless the consent of both parties has been obtained.