Divorce and Insurance FAQ

My husband has no life insurance, and I'm counting on him for child support payments. What happens if he gets sick or dies? Is there some way of ensuring that the payments will continue?

Many couples choose to secure their support obligations through life insurance. Some already have life insurance. Others, who are medically qualified, may obtain new life insurance coverage or increased coverage at the time of the divorce. Providing life insurance policies to cover one's support obligation is an excellent way to secure the costs of raising a child in the even of the paying parent's death.

The topic of support obligations following the death of the payor parent, with specific reference to life insurance, should be addressed in the separation agreement. What are the downsides to having the life insurance benefits paid to the child? What are the downsides/advantages of naming the surviving ex-spouse or surviving parent as the beneficiary of the policy? What are the benefits of having the life insurance policy proceeds paid into a trust? What happens if the payor parent changes coverage while alive, or eliminates the coverage? What happens if the payor parent changes the beneficiary designations? These and other issues can be addressed in a properly drafted life insurance provision of a separation agreement.

If you have questions about using life insurance to secure child support, you may want to consult an experienced family law attorney who can advise you on this topic and draft the settlement agreement on your behalf.

You could name the child or a custodian as the beneficiary. You could designate your ex-spouse or your child's other parent as beneficiary.

My spouse has a health plan through his work. Will I still be covered after we divorce?

If your health insurance is through your spouse's employer, once the divorce is final you will need to obtain health insurance for yourself. It is very important that there is no gap in coverage, so you must deal with the issue early in divorce negotiations.

What are COBRA benefits? Will I have to pay the COBRA premiums for my ex-spouse?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It gives employees the right to pay premiums for and keep the group health insurance that they would otherwise lose after they: Reduce their work hours; Quit their jobs; Lose their jobs

Most people can keep the insurance for up to 18 months. Some people may be able to keep it a few months longer.

COBRA also lets family members choose to keep health insurance after a job loss or other qualifying event would normally cause them to lose the coverage they have through your employer. (See the section called "What is a qualifying event under COBRA?" for more on this.) COBRA applies to nearly all employers with 20 or more employees. A few states require even smaller employers to offer COBRA. See the "To learn more" section to find the National Association of Insurance Commissioners, where you can get contact information for your state insurance commissioner's office.

Before COBRA, when employees left their companies, they and any covered family members lost their health insurance right away. COBRA allows an employee to buy health insurance through the employer even though the person no longer works there or no longer works full time.

My spouse is changing her auto insurance to another company. Should I cancel the existing insurance on her vehicle to save money?

In some states, automatic restraining orders go into effect immediately when one spouse files for divorce. These restraining orders keep spouses from taking certain financial or administrative actions, not from physical contact with each other. The exact language of these restraining orders varies, but they often address insurance issues. For example, some states prohibit either spouse from altering or canceling an insurance policy, including life and health insurance. In some states, statutes or court rules restrict a spouse's ability to cancel an insurance policy during a divorce.

How can I find out how my divorce will affect my insurance coverage?

When a divorce occurs, coverage for the non-employee spouse may eventually end (unless the divorce decree requires a spouse to continue carrying coverage on the ex-spouse).

However, temporary protection may be provided by the Consolidated Omnibus Reconciliation Act of 1986, COBRA. This federal law was designed to protect employees of larger companies (20 or more workers) and their dependents from losing group insurance coverage as a result of job loss or divorce. If your former spouse maintained family health coverage through work, you may (at your own expense) continue this group coverage for up to 36 months after the divorce or legal separation. This COBRA coverage will terminate sooner than 36 months, if you remarry or obtain coverage under another group health plan.

How can I get insurance on my ex-spouse?

Once divorced, you cannot stay on your ex's health insurance -but your children can and probably should. After the divorce is finalized, you can qualify for COBRA coverage, but COBRA is temporary and lasts only up to 36 months.