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In working through your divorce, don’t forget some valuable assets: your life and your health. Both directly affect your ability to earn income and to care and provide for yourself and others. You have several areas to look at to ensure you’ve managed your risks.
Most couples name each other as beneficiaries on their life insurance policies. At a minimum you will need to change your beneficiary designations on all policies, regardless of size and type as soon as you can which is usually once your divorce is final. Be certain to check with your attorney before making such changes so as not to violate certain laws while going through divorce. You may need to adjust the amount of coverage, particularly if you were the nonworking spouse and you now plan to work to support yourself and maybe others. Factors to consider include replacing your income, paying off debt and leaving enough to care for others if you die.
Health insurance usually comes with employment, and again, nonworking spouses will be most at risk in a divorce, since they will no longer be considered dependents covered under the employed spouse’s group insurance. If you work and your employer offers health insurance, the divorce is considered a qualifying event, and you can switch to your employer’s coverage without waiting for an open enrollment period. Call the insurance carrier for your spouse’s policy and request a certificate of insurance. This proves that you were insured until the qualifying event, so you can’t be excluded or charged a higher premium for pre-existing conditions. Again, check with your attorney before taking these steps.
If you are not employed, the same qualifying event definition makes you eligible for coverage under COBRA, a federal that allows you to continue the coverage for a certain time period under specific conditions. COBRA can be an expensive option, because you pay the full premium yourself, and it is temporary at best. Certain professional groups and other associations also offer group insurance for which you may be eligible. You can also purchase individual health insurance privately, although the rates are typically much higher than a group policy with comparable benefits.
Data released by the U.S. Census Bureau in January 2009 showed that 19 percent of U.S. residents reported some level of disability. A 35-year-old man has a one-in-five chance of a disability lasting longer than three months, according to 2009 information from America’s Health insurance Plans. With two incomes, you have something of a safety net if you are unable to work because of a short or long-term disability. Going it alone, you may want to consider disability coverage either through your employer or privately, especially if you have no emergency reserve funds or other income to fall back on.
Your homeowners insurance covers your house and its contents. If you decide to move to an apartment, you may need renter’s insurance to cover your possessions. Check limits for jewelry and other high valuables, such as antiques and collectibles, and purchase riders to cover them if necessary.
Risks play as important a part in forming your financial picture as do your assets and liabilities. With all the products and carriers in the market, the choices can be overwhelming. A certified divorce financial analyst ™ can help you weigh your options and determine the best course of action during and after your divorce.
Securities offered through Securities America, Inc., Member FINRA/SIPC, and advisory services offered through Securities America Advisors, Inc., Karen Mendez, Representative. California Insurance License # 0D76086 Mendez Wealth Strategies© and the Securities America Companies are not affiliated. Written by Securities America for distribution by Karen Mendez.
Karen helps attorneys; mediators, individuals and couples, navigate through the financial morass of divorce and widowhood. Her expertise lies in understanding the special tax and financial issues that can plague divorce and she helps clients get their financial fair share and equitable settlements. She provides financial analysis, projections and solutions so clients can avoid long-term regret over decisions made early on in divorce and widowhood. Karen offers a range of financial, investment and insurance services that address clients’ complete financial picture and long-term needs before, during and after marriage. She is currently writing a book entitled, “To Have and To Hold Onto Your Financial Fair Share: Financial Decision Making When Marriage Ends in Divorce or Death.”