You may think divorce is cut and dry, a simple signing of forms, a couple of lawyers, a court date and judgment and you’re done. But if child or spousal support is involved; things can get complicated, and you’re financially united for richer and for poorer. Most divorcing couples focus on splitting assets and hammering out support payments, too many neglect one major post-divorce reality: insurance.
Just like when you were married, during separation you still need to consider your child(s) needs before your own. Whether you’re relying on or are responsible for paying support, or just setting up life as a newly single person, you need to make sure you maintain sufficient insurance coverage. Why is it so important? Start by asking yourself these four questions:
1. What if your ex dies — or you do?
If you rely on support payments from your ex, could you manage if he or she died and the payments stopped? And if you’re the one making the payments, did you know that your obligations don’t generally stop when you die? Without provisions made to cover future support payments, your estate could be tied up for a very long time. Make sure the ex-spouse making the payments has a life insurance policy that names the other as the beneficiary, to cover spousal and/or child support. In fact, consider making it part of your separation agreement; arrange with your lawyers for the beneficiary designation to be signed at the same time as the separation agreement, to ensure that it gets done. To be sure the beneficiary is not changed later, make it irrevocable. And to confirm that all is being handled correctly, seek independent legal advice.
If your children are young, the amount of the policy should probably cover more than just the monthly payments. It should cover all the big expenses that raising kids will incur such as education savings, food & clothing, sports & hobbies, and out of school activities. How much insurance you need depends on how much support is being paid, as well as the age and stage your kids are at.
2. What if one of you becomes too sick to work?
The death of a parent can only be eclipsed be the injuring of a parent. Just like life, the earning potential of a person must be protected. Whichever person is making the support payments has to pay his or her own bills as well, so there’s a good chance that employer-sponsored disability insurance might not provide enough coverage to go around. For the good of both of you, consider taking out a separatedisability insurance policy in the event that one of you is unable to work due to illness or accident.
3. How will you pay unexpected medical bills?
You may need to rethink some of your insurance needs; now that your partner and his/her work coverage is gone. Consider getting major medical insurance to cover the cost of big bills not covered under your province’s health insurance plan. If you no longer have access to work-based coverage, you now have to cover yourself when you go away, so make sure you factor this into the cost of travel insurance to ensure you’re protected in case you get sick or injured while abroad.
4. Is your home or car covered under the right name?
If you haven’t had home or auto insurance before, you’ll need to get coverage as soon as possible. You’ll also need to make sure the name on your insurance policies is the same as the name on your home title and car ownership or lease. A home or car insurance policy is an agreement between the insurance company and the owner of the home or car, says Sylvain Lachapelle, director, personal lines at belairedirect. “If you are not the owner or lessee, the agreement is not valid and in case of a loss you will not be covered.”
Although your living situation has changed it is a good idea to remember that your responsibilities to your dependents have remained the same. As with any major life change, it is important and essential for you to continue protecting your family, be careful to review your policies and make sure you have the coverage you need.
For more information and guides on life insurance visit:http://www.protectingwhatmattersmost.com/
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