Divorce is an emotional and financial upheaval that requires several crucial tasks to sort out the separation of assets. While updating insurance-related tasks may not be at the forefront of the post-divorce to-do list, it is imperative to do so to avoid complications down the road.
Update Life Insurance Beneficiaries
After a divorce, updating life insurance beneficiaries should be a top priority to ensure the ex-spouse doesn’t inherit the death benefit. Typically, most people choose their spouse as the primary beneficiary, but after a divorce, this needs to be changed. If policyholders fail to update their beneficiaries, their ex-spouse may inherit the death benefit if the policyholder passes unexpectedly.
Thankfully, updating beneficiaries is usually straightforward and can be done by contacting the insurer directly or through an online platform. For couples with children, naming them as new beneficiaries may be the easiest solution. Otherwise, policyholders can choose another family member or friend. If the policyholder no longer feels the need for life insurance, they can always cancel it instead.
Adjust Auto and Home Insurance Policies
Newly divorced individuals need to purchase their own home and auto insurance coverage, replacing the shared coverage they previously had. Getting new quotes and selecting the best deal is usually straightforward, but some may need to consider their coverage needs carefully.
In some cases, it may be possible to reduce coverage if it’s not needed. For example, if an endorsement for expensive jewelry was included in the homeowners insurance policy, this may no longer be necessary. Moving from a home to an apartment may also allow individuals to switch to a more affordable renters insurance policy.
It’s essential to note that some insurance companies may raise premiums for divorced individuals, as married couples often receive discounts for being perceived as less risky drivers.
Obtain New Health Insurance
Divorce qualifies individuals for a special enrollment period to obtain a new health insurance policy outside of open enrollment. Shopping around is crucial to find a great deal on a new policy, with consideration given to coverage of necessary prescriptions and hospitals.
Choosing a higher deductible can help keep premium costs low. It’s important not to put off updating insurance, as accidents can happen at any time, and having the wrong insurance can complicate the situation.
Take it One Step at a Time
It’s normal to feel overwhelmed with all the tasks that need to be done after a divorce. If it feels too much, individuals can split up the tasks and focus on one at a time. However, it’s crucial not to put off updating insurance, as accidents can happen at any time, and having the wrong insurance can complicate the situation.
So, updating insurance-related tasks may not be top of mind after a divorce, but it is a crucial step to ensure financial stability and avoid complications down the road. Updating life insurance beneficiaries, adjusting auto and home insurance policies, and obtaining new health insurance are three crucial tasks that need to be done as soon as possible after a divorce.
