INSURANCE
During the course of your divorce proceedings and the negotiations that go along with them, one topic that is often overlooked or taken for granted is insurance. People just don’t think about it – or address it – until they need it. As you separate, there are different insurance issues that you need to address:
Health Insurance: A divorce can seriously complicate your health insurance coverage. Most families have an employer-sponsored plan that provides benefits for the entire family. Following a divorce however, the spouse with the employer-provided health insurance plan may no longer be able to provide coverage for the ex-spouse. A divorce will cause the dependent spouse to lose his or her healthcare coverage. Though this is a harsh reality, it is one of the many unfortunate repercussions of divorce. In the event that both spouses do not have access to sufficient health insurance coverage and COBRA or other alternative coverage is too costly, there is another option.
When a court makes an order for maintenance or support of a spouse, the court shall determine whether the obligor under such order has health insurance or other health coverage available through an employer or organization or, to them at a reasonable cost that may be extended to cover the spouse for whom support is ordered. When the court has determined that the obligor has such insurance or coverage available, the court shall include in the support order a requirement that the obligor do one of the following: exercise the option of additional coverage in favor of the spouse, obtain coverage for the spouse, or reimburse the spouse for the cost of health insurance.
As it relates to health insurance for children, the law in Massachusetts is clear: “When the court makes an order for maintenance or support of a child, said court shall determine whether the obligor under such order has health insurance or other health coverage on a group plan available to him or her through an employer or organization or has health insurance or other health coverage available to him or her at a reasonable cost that may be extended to cover the child for whom support is ordered. When said court has determined that the obligor has such insurance or coverage available to him or her, said court shall include in the support order a requirement that the obligor exercise the option of additional coverage in favor of the child or obtain coverage for the child.”
Life Insurance: Life insurance may be court-ordered as a condition or as part of a divorce. What most people don’t realize is that the court views life insurance more as child support or alimony insurance – it’s deemed to be security on one’s obligation to pay said support (which terminates upon the obligor’s death). Courts will frequently order a parent to maintain a life insurance policy naming the other parent as beneficiary on behalf of the children (you wouldn’t want to name children as beneficiaries because most would use the money to buy candy or a new car!).
The amount of life insurance is determined with an eye toward the amount of the death benefit. In establishing the amount of the death benefit, one must keep in mind that child support is subject to change and a death benefit which appears excessive at the time the divorce was negotiated may not seem excessive in the future if viewed in the context of a future child support order. Moreover, one has to look to the level of inflation which, though low for the past ten years, has in recent memory been quite high.
Our attorneys often attempt to incorporate estate planning strategies within a Separation Agreement in order to achieve our client’s goals or obtain other tax advantages. As an example, The Irrevocable Life Insurance Trust may be used by a beneficiary in any way he or she sees fit if you establish a trust – with specific instructions – as to how the proceeds are to be used for your children. Most common uses of these proceeds are for child support, college expenses, etc. Just make sure to read about changing designations in our estate planning section – you‘ll likely want to make sure the proceeds remain out of an ex-spouse’s reach.
Homeowners Insurance: If you see the value in insuring the items in your home against damage or theft, make sure that you’ve got a homeowners insurance policy in place.
Disability Insurance: Most people don’t think about becoming disabled however statistics show that if you are under age 65 you are twice as likely to become disabled as you are to die. Disability insurance pays the insured a monthly benefit in the event that the insured person is disabled and unable to work. This type of insurance is extremely important if alimony or child support payments are ordered, especially if the obligor has no other source of income to make these payments.
Automobile Insurance: Auto insurance covers damage to your car and damage that it may cause to other people’s property. Auto insurance is regulated by the Commonwealth of Massachusetts. When you separate from your spouse, inform your insurance agent. Additionally, your separation agreement should clearly state who is responsible for paying the auto insurance premiums for both the children and the other spouse.
Our attorneys provide details of Massachusetts divorce and other family law issues including answers to many frequently asked questions. For uncontested divorce help, call us at (800) 910-DIVORCE.
If you’ve been served with a Complaint for Divorce, or would like to explore your options in making an initial filing for a contested divorce, please contact The Massachusetts Family Law Group for a no-obligation consultation.