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Divorce changes insurance coverage

Ending a marriage can lead to disputes over issues such as property division and spousal support. But many routine but important financial matters may be overlooked after the divorce is finalized. Health and life insurance coverage and needs, for example, may change.

Usually, one spouse receive health insurance coverage under the other higher-earner spouse's insurance plan with their employer. Since 1986, federal COBRA insurance coverage was available to assist non-income-earning spouses. COBRA allows them to continue health coverage under their former spouse's employer plan for up to three years. COBRA, however, is expensive for the spouse who pays the premiums. These are typically the employee and employer's share and an additional 2 percent. It is also a comparatively short-term solution.

Other affordable health care options are available since the passage of the Affordable Care Act in 2010. These may provide more choices for people without access to their own employer-sponsored health insurance or if they have pre-existing conditions.

Life insurance is also important, especially for a spouse expecting to receive alimony. Spousal support usually terminates when the payor dies. One remedy is for the spouse receiving this support to inherit other replacement assets. More typically, a life insurance covering the payor spouse can help assure that payments continue. Life insurance may be part of the divorce settlement. When this occurs, it is usually advisable for the recipient spouse to own the policy and pay premiums to assure control over the policy, that no changes are made and that there are no payment lapses.

Life insurance should also be finalized before the divorce is finalized. Appropriate modifications may be made if the payor spouse is uninsurable. An attorney can help a spouse prepare for these issues and others when undergoing a divorce. Their assistance may help assure that a settlement is fair and reasonable.

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