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Divorce: Health Insurance, Disability Insurance and Property Insurance

Divorce: Health Insurance, Disability Insurance and Property Insurance

Divorce can often times cause issues in medical insurance coverage for divorcing couples. Many families are protected under an employee plan carried by mom or dad, but in the event of divorce, such a policy could terminate for the non-employer protected spouse. Unless a divorce decree requires continuation of coverage, temporary protection may be provided by the Consolidated Omnibus Budget Reconciliation Act (COBRA). This law is designed to protect employees of most companies with 20 or more workers and their dependents from losing group insurance coverage as a result of job loss or divorce. If you and your former spouse maintained family health coverage through work, COBRA will enable you to continue this coverage at your own expense for 36 months, until you remarry, or until you get coverage under another health group plan.

Another potential risk to your income could occur if your spouse becomes disabled and you receive alimony and/or child support. If he or she cannot work any longer due to disability, the court could lower or eliminate the payments completely, leaving you with a large financial burden. Planning for a disability policy should be completed before the divorce is final, however unlike life insurance, you can’t own a disability policy on someone else. So, the divorce decree could require your ex-spouse pay premiums on a policy and submit proof that the policy is in force regularly.

As for property insurance, real and personal property must be insured by the actual owner of the property. Make sure that any policies that do not reflect this are modified and updated after divorce. With respect to divorcing homeowners, there are several options: the home can be sold immediately and the proceeds divided, both spouses can continue to own the house jointly with a view toward future sale, or one spouse can keep the family home and buy out the other’s interest.

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