Future After Divorce: How the Split Impacts Insurance and Other Benefits

July 17, 2012 (Press-News.org) Future After Divorce: How the Split Impacts Insurance and Other Benefits

The decision to get a divorce is not an easy one. From determining how assets are split, custody issues if children are involved and whether the separation will be finalized using a mediator or within the courtroom, the process can easily be overwhelming.

Unfortunately, there are still issues to consider even after the divorce is officially settled. Many aspects of financial planning run on "auto pilot" during marriage, according to a recent article in Forbes. As a result, unintended financial consequences can result if action is not taken.

How to Protect Your Financial Future After Divorce: Insurance Issues

Financially negative consequences can impact everything from insurance to Social Security benefits after divorce. The two main types of insurance affected by a divorce are health and life insurance.

An ex-spouse is not allowed to remain on his or her ex's health insurance plan once the divorce is finalized. To avoid any surprises in the case of medical emergency, the spouse losing coverage may need to sign up for a temporary COBRA plan to help bridge the gap between finding long-term insurance and no longer receiving coverage from an ex's plan following a divorce.

It is also important to take a look at life insurance policies. In most cases, couples list their spouse as the beneficiary. When this is done, the spouse automatically receives the proceeds if the policyholder dies. Often, a divorcing individual would instead prefer the money go to children, siblings or a new partner instead of their ex. The beneficiary designation can be easily amended by contacting the insurance provider.

A third financial issue, that thankfully provides some good news, concerns Social Security benefits. An individual may be able to receive half of the amount an ex receives in Social Security benefits.

Essentially, these benefits may be available if:
-The marriage lasted at least ten years and the divorce occurred at least two years ago.
-The individual attempting to receive benefits is at least 62 years old and the ex is currently receiving benefits.
-The individual attempting to receive the benefits is not married.

Determining what benefits continue after divorce and which are terminated can be difficult. In order to proactively control your financial future, it is wise to discuss your unique situation with an experienced divorce attorney.

Article provided by Magner, Hueneke, Smith & Borda, LLP
Visit us at www.mhslaw.net/