Life And Health Issues

Life and health insurance issues are important considerations in divorce proceedings from at least three aspects:

Who will fund the support order or alimony if the provider should die?
If both spouses and children were covered under a single group health plan, how will the separating spouses and children be covered after the divorce?
For the spouse with custody, what additional needs are there for life and/or health insurance?

For the above reasons, it is prudent that the divorce settlement include a provision for life insurance on the provider, to protect the support order or alimony. The recommended approach is to acquire a life insurance policy with a face amount sized to provide the regular support payments, when deposited in an appropriate investment account. Here is a resource to estimate the purchase cost.

Regarding health insurance, divorce is a qualifying event for benefits under COBRA, so named after the act of Congress that created it. Also, ask your attorney whether the divorce settlement can include a provision for health insurance, especially if either spouse can provide it at a reasonable cost through group coverage.

Finally, you may need to purchase additional health or life insurance coverage to protect yourself and your children. Hopefully, this section will be of assistance.

Life & Health Insurance FAQ’s

What insurance issues should I be concerned with during divorce proceedings?
There are several issues. First of all, just as with any other property, you need to determine who will be the owner of your various insurance policies. Secondly, if both spouses and child(ren) are covered under a group health plan, how will both spouses and child(ren) be covered after the divorce? Thirdly, consider what will happen to the income from the support order or alimony if the provider should die.

Why is ownership of the insurance policies important?
The owner controls the policy and has the right to name the beneficiaries. For instance, your spouse may be the current owner of a life insurance policy that has you named as the beneficiary. This means that your spouse could change the beneficiary at any time, contrary to what you might desire or need.

If my child(ren) and I are currently covered under my spouse’s group health plan, what are my options after divorce?
Divorce is a qualifying event for benefits under COBRA, so named after the act of Congress that created it. But, this is just an interim measure. Ask your attorney whether the divorce settlement can include a provision for health insurance, especially if either spouse can provide it at a reasonable cost through group coverage. Finally, you may need to purchase additional health coverage to protect yourself and your child(ren).

About Cobra:
Divorce is a qualifying event under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Under this act, any person who would lose employer-based coverage because of divorce can choose to purchase continued coverage for up to 36 months. The act applies to employers with 20 or more employees, but the coverage is not automatic: you need to contact the employer within 60 days of the qualifying event and complete the necessary paperwork. Unfortunately, COBRA coverage can be expensive.

What will happen to the income from the support order or alimony if the provider should die?
For the above reasons, it is prudent that the divorce settlement include a provision for life insurance on the provider, to protect the support order or alimony.If not, you might consider purchasing such a policy yourself.

How much does life insurance cost?
We have provided a life insurance estimator to assist you in this regard.

What health considerations are important in buying life insurance?
Your personal and family health history are big factors in determining the rate class under which you can purchase life insurance. Many sites only quote the rates for the healthiest people, but this can be misleading. Follow this link to obtain life insurance quotes that consider your underwriting profile.

If I need to purchase life insurance, which companies have the cheapest rates?
See this independent survey of competitive term life insurance companies.

If I need to purchase health insurance, how do I get started?
You can find out more about health insurance, and apply online through this resource.

Health Insurance for Self-Employed and Individuals

If you are self-employed, or otherwise in need of individual health insurance coverage, how do you go about finding the best plan?

First, learn the language:

HMO – Health Maintenance Organization. This is a very structured plan where you pick a PCP (Primary Care Physician), the doctor you see first for everything. The PCP refers you to a specialist.

PPO – Preferred Provider Organization. This is less restrictive than an HMO. You self-refer to any physician in the network for care.

Indemnity Plan – The old traditional plan before managed care. You go to any doctor or hospital. There are not many of these left, and they cost the most.

Hospital/Surgical Plan – These plans cover the basics with few bells and whistles. Some provide riders to make them look like major medical plans.

MSA – Medical Savings Plan – These plans were designed by Congress. You have a high deductible health plan coupled with a tax-deductible savings plan.

Temporary Health Insurance – A great low cost alternative for those needing coverage for one to twelve months or who cannot qualify for long term coverage.

The above ary very general descriptions to help explain the different options. Not all plans are available in all states.

Second, select the best type of plan for you:
This will depend on the length of time you need the coverage; how much money you have in savings or are willing to risk; your plans for having children; the doctors your prefer; cost; and most importantly your health.

If you are planning a family – Having maternity coverage is a must. An HMO will almost always provide the lowest cost, as maternity is built into the cost.

If you are between jobs – A temporary plan is the best way to go.

If you prefer a particular doctor or hospital – A PPO may be the best way to go.

If money is tight – A Hospital/Surgical Plan, HMO, Temporary Plan, or high deductible PPO may be options for you.

If you want complete freedom – and money is no factor, then an Indemnity Plan is best.

If you hardly ever use your plan – and you wish you had all the money back, then an MSA may be best for you.

If you have minor problems – that would be pre-existing conditions with most plans, an HMO might not consider these as problems.

If an HMO will not take you – a PPO, Indemnity, Hospital/Surgical or MSA may take you, but rider the condition.

Third, find out what it will cost:

To find out what it will cost, contact an agent in your state, or if you prefer, follow this link for a health insurance quote.

To avoid any surprises at claim time, it is important to provide accurate information. Do not give an insurance company an excuse not to pay!