Insurance and Divorce
People get married for lots of reasons: love, the desire to have children, the societal and familial expectations that they simply are of the right age to get married. Lots of people, if not most, get married for a long-term reason: financial stability.
When you get divorced, your heart isn’t just broken and your world turned upside down, your financial life becomes much more unstable.
Beyond just the division of your assets and debts there is the matter of support which is either arbitrarily set based on needs and ability to pay or a standardized statutory formula. These division of asset and support orders do not provide for absolute stability, however. Things can happen outside of the bounds of the court order: You could lose your job; Your ex-spouse could get sick; A horrible accident could happen to either of you.
For these reasons, certain types of insurance are required or encouraged when finalizing your divorce. These insurances are necessary for the same reasons they were necessary during the marriage: accidents happen.
Health Insurance and Divorce.
During the pendency of a divorce whatever health insurance policies that were in place before the divorce filing must stay in place until further order of court. Typically, the divorce court judge will have issued a standing order instructing exactly this policy.
If a spouse removes a soon-to-be-ex-spouse from their insurance, the removed spouse has the right to file an emergency petition asking to be reinstated on the insurance. If the removed spouse incurs any medical expenses that would have been covered by insurance had the spouse not been removed from insurance, those medical expenses will likely be ordered reimbursed by the spouse that removed the medical insurance.
Out-of-pocket medical expenses, including premiums, can be split between the parties during the pendency of the divorce via a motion for contribution. The theory here is that all legitimate expenses are marital until the divorce is finalized.
Children’s health insurance can be another matter. In many jurisdictions, a child’s health insurance expense will be covered by one parent and 50% of the expense will be allocated to the other parent in the form of an increased or decreased child support payment.
Life Insurance and Divorce.
Divorces often involve support orders in either the form of alimony (also called maintenance in some jurisdictions) or child support. These support orders are usually in effect for a specific period of time (either a set number of years in the case of alimony or until the child turns 18 and/or graduates from high school).
What happens if the alimony/child support payor dies before that period of support paying is complete? The divorce courts will often order that a party have a life insurance policy that will cover the presumed owed support.
The divorce courts will also order that the surviving spouse be named the beneficiary of this life insurance policy…not the children. Most of a child’s expenses are in non-direct forms such as rent, heat and food that the child does not purchase themselves.
Child support receiving spouses must know that if they request the child support paying spouse to get life insurance that they, in turn, will also be required to get a life insurance policy. If the parent that cares for the children passes away, the other parent will now require child care or have to cut back on their hours at work. Therefore, a life insurance policy may be necessary for both spouses, no matter what their incomes.
Renters Insurance and Divorce.
The parties to a divorce will usually live in a marital home that both parties own. That home will either be sold by both parties or one party will keep the home in exchange for an equal valued asset or assets. The party without homeownership will then move into a rental for the time being while they re-evaluate their life.
While in the rental home, the divorced party will not enjoy the mandatory insurance required that a homeowners’ insurance policy requires. For this reason, the renting divorced spouse should consider rental insurance to insure the assets within the rental home.
Russell Knight is a Divorce Attorney in Naples, Florida.