Divorce Help 101
Insurance
In the arena of divorce, insurance can be applicable to a number of topics. It can be an asset to divide, a safety net for children, security for post-divorce issues and even a harsh reality for some parties.
When people think of insurance they typically think of the normal forms of – life, health, home or auto. While generally application of insurance to divorce will involve one or more of these forms of insurance, in practice the accompanying issues can be of vital importance.
For example, at the time of separation or divorce the existence of insurance and who will be paying for it can be critical. A separated spouse will want to ensure that insurance policies remain paid and in effect. This may require a court order to guarantee.
With whole life insurance, in addition to the death benefit that accompanies such policies, there can also be a cash value that will have to be addressed during the negotiations or the trial of the matter. Generally following a divorce each party will have ownership and control of their own policies though consideration will have been given for the value of the policies during the process. For the most part, term life insurance policies do not have any cash value where whole life policies typically have associated with them a cash value.
Normally people don’t like the idea of an ex-spouse being the beneficiary of a life insurance policy on their life given the animosity that accompanies many divorces; however, in the event there is an ongoing financial obligation between the spouses, it is not uncommon for there to be such post-divorce policies. Say there is an ongoing alimony or child support obligation typically an estimate will be made as to the total aggregate amount of the support obligation which will allow an amount of life insurance to be purchased to cover the total amount of the obligation. The theory behind this is that if one spouse bargained for a certain amount over the life of the obligation, the death of the payor shouldn’t necessarily terminate the payee spouse’s right to receive the actual payments.
Generally when life insurance policies are used in this fashion the payor will have the duty to secure the policy, pay for it and provide information as to the existence to the other spouse.
Health insurance can also be a difficult issue. Typically health insurance needs to be addressed for minor children. Most states’ child support guidelines contemplate the issue of children’s health insurance and give credit for payments and provide for payments between the spouses for out of pocket expenses such as uncovered expenses.
The issue can be much more complicated for spouses. Typically where one spouse is covered under the health insurance policy of the other spouse, the coverage is provided based upon a family rider or add-on to the policy. The problem in this area arises when a divorce is granted, the divorced, previously covered spouse, is no longer eligible to be maintained on most policies. While some insurance companies are allowing divorced spouses to continue to cover their former spouses, this situation is not yet mainstream and generally will end if the spouse with the insurance plan later wants to cover a new spouse.
While federal law allows for a period of health insurance access under COBRA laws, this is generally limited to a short period and can be quite costly. It is an unfortunate reality that many divorced spouses are faced with having to go forward with their lives without the protection of health insurance as it is simply too costly. In order to counter this it is not uncommon for parties to resolve all issues existing between them and remain married so as to allow for health insurance to continue for both parties. However, this is almost always done by agreement and is rarely if ever done by a Court; however, it is not unusual to see a court require one spouse, where alimony is at issue, to pay for health insurance as part of an alimony obligation.
Disclaimer
When people think of insurance they typically think of the normal forms of – life, health, home or auto. While generally application of insurance to divorce will involve one or more of these forms of insurance, in practice the accompanying issues can be of vital importance.
For example, at the time of separation or divorce the existence of insurance and who will be paying for it can be critical. A separated spouse will want to ensure that insurance policies remain paid and in effect. This may require a court order to guarantee.
With whole life insurance, in addition to the death benefit that accompanies such policies, there can also be a cash value that will have to be addressed during the negotiations or the trial of the matter. Generally following a divorce each party will have ownership and control of their own policies though consideration will have been given for the value of the policies during the process. For the most part, term life insurance policies do not have any cash value where whole life policies typically have associated with them a cash value.
Normally people don’t like the idea of an ex-spouse being the beneficiary of a life insurance policy on their life given the animosity that accompanies many divorces; however, in the event there is an ongoing financial obligation between the spouses, it is not uncommon for there to be such post-divorce policies. Say there is an ongoing alimony or child support obligation typically an estimate will be made as to the total aggregate amount of the support obligation which will allow an amount of life insurance to be purchased to cover the total amount of the obligation. The theory behind this is that if one spouse bargained for a certain amount over the life of the obligation, the death of the payor shouldn’t necessarily terminate the payee spouse’s right to receive the actual payments.
Generally when life insurance policies are used in this fashion the payor will have the duty to secure the policy, pay for it and provide information as to the existence to the other spouse.
Health insurance can also be a difficult issue. Typically health insurance needs to be addressed for minor children. Most states’ child support guidelines contemplate the issue of children’s health insurance and give credit for payments and provide for payments between the spouses for out of pocket expenses such as uncovered expenses.
The issue can be much more complicated for spouses. Typically where one spouse is covered under the health insurance policy of the other spouse, the coverage is provided based upon a family rider or add-on to the policy. The problem in this area arises when a divorce is granted, the divorced, previously covered spouse, is no longer eligible to be maintained on most policies. While some insurance companies are allowing divorced spouses to continue to cover their former spouses, this situation is not yet mainstream and generally will end if the spouse with the insurance plan later wants to cover a new spouse.
While federal law allows for a period of health insurance access under COBRA laws, this is generally limited to a short period and can be quite costly. It is an unfortunate reality that many divorced spouses are faced with having to go forward with their lives without the protection of health insurance as it is simply too costly. In order to counter this it is not uncommon for parties to resolve all issues existing between them and remain married so as to allow for health insurance to continue for both parties. However, this is almost always done by agreement and is rarely if ever done by a Court; however, it is not unusual to see a court require one spouse, where alimony is at issue, to pay for health insurance as part of an alimony obligation.
Disclaimer
