Insurance Considerations in a California Divorce

Going through a divorce is often an overwhelming and stressful process. One part of thedivorce process must involve a review of insurance policies.

One of the primary considerations is related to health and dental insurance. A former spouse generally cannot stay on a family work insurance plan. Each individual must have his or her own insurance plan, which may be complicated for stay-at-home parents or the self-employed.

The non-covered ex-spouse is however eligible for COBRA, a federal program that entitles the former spouse to continue coverage with the same employer's group plan by paying premiums themselves. COBRA coverage is limited to 36 months, and after that point, the divorced spouse must switch to a different plan.

Couples with minor children should also determine which healthcare plan is best for the children and how best to allocate the health and dental insurance costs.

Car Insurance

Following a divorce, each person will need their own insurance plan to cover their vehicle. If one spouse was responsible for paying premiums, make certain that the coverage does not lapse while in the process of switching plans.

Life Insurance

Life insurance beneficiary designations are a part of the policy. The owner of a life insurance policy is the only one who can name or change beneficiaries. In some cases, a spousal support agreement may require an ex-spouse to remain the beneficiary as part of a divorce settlement.

If you want to make children the beneficiaries of a life insurance policy, keep in mind that if they are minors they cannot receive the benefits directly. A trust can be set up for minor children with an adult designated to handle the finances until children reach age 18.

Insurance policies need to be reviewed and updated or you could be left unprotected in the case of a car accident or medical emergency.

Source: Reuters, "How to untangle your insurance plans in divorce," Sept. 11, 2012