Life is complicated: Make sure your insurance changes as you make changes
By Amy Higgins
Big changes come about when adulthood sets in, and adjusting to life’s major events can come with excitement as well as despair. From marriage to divorce and death, there’s a lot to consider regarding your next steps, including insurance coverage.
Marriage
- Auto insurance: Your insurance likely will be discounted if you combine policies.
- Health insurance: Check with both of your providers to find out whether your policies cover spouses. If so, assess the costs and coverage to determine which plan best suits your needs.
- Homeowner’s or renter’s insurance: Review your policy. Be sure you have enough coverage to replace all of your combined valuables.
- Life insurance: If you already have a policy in place, now is the time to update the information and include your spouse. If you don’t have a policy, talk to a life insurance agent and discuss your options. Consider the amount of debt your spouse will undertake if you die. According to LIMRA International’s “Facts About Life 2010” guide, the top two reasons Americans have life insurance is to cover burial and final expenses, and to help replace the income of primary wage earners.
Divorce
- Auto insurance: Separate your policies and update your personal information, such as address and telephone number. “Removing a former spouse from the insurance policy also protects you from possible liability if he or she is involved in an accident and gets sued,” according to the Insurance Information Institute.
- Health insurance: If applicable, you’ll want to remove your former spouse from your policy. If you have children who are minors, be sure they still are included in your plan. If your former spouse was paying for your insurance, find out whether you can get COBRA coverage.
- Homeowner’s or renter’s insurance: Both parties will homeowner’s or renter’s insurance policies. If you acquire the marital household after the divorce, remove your former spouse’s name from the policy and adjust the coverage of your personal belongings accordingly.
- Life insurance: Review your policy and be sure you’re happy with the beneficiaries you chose. The Insurance Information Institute suggests couples think carefully before they make any changes to their life insurance policies after divorce, as there may be good reasons to continue covering a former spouse — when one ex-spouse is paying alimony and child support to the other, for example. “Some divorced couples may also consider keeping (or purchasing) life insurance on the spouse who has the primary responsibility for raising the children. If he or she dies, costly childcare will need to be arranged and financed,” the Insurance Information Institute explains.
Death
- Auto insurance: Continue coverage on the vehicle or vehicles left behind by your spouse. If you sell your spouse’s vehicle, then you should call your insurance provider to cancel coverage. Find out whether you’re owed a refund for your spouse’s paid premium.
- Health insurance: If your spouse was paying for your health coverage, call the insurance provider to find out when your coverage will end. If your insurance was covered by your spouse’s employer, learn about your eligibility for COBRA, according to AARP.
- Homeowner’s or renter’s insurance: Remove your spouse from the policy, and review and adjust your coverage for possessions accordingly.
- Life insurance: Locate any documents that could explain your inheritance and point you to the life insurance provider. To begin the claims process, the Insurance Information Institute suggests getting several copies of the death certificate, filling out the necessary forms with the insurance company and submitting a certified copy of the death certificate from the funeral director with the policy claim.
Major changes in life can have a profound effect on your insurance needs, so an annual coverage review is a good idea, the Insurance Information Institute points out. Even though adjusting your life can be difficult after a major change, moving forward can be less burdensome if you have the right tools to do so.
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