Insurance tips for divorcees
Ashe of the LIFE Foundation offers these five tips for the newly divorced.
1. It’s more important than ever to make sure both parents have life insurance policies with one or both including the children as beneficiaries. Ashe says the ex’s new spouse may not spend their life insurance money wisely, or name their own children or a new spouse should they remarry, as sole beneficiaries. This could mean your money would go to someone entirely different and leave your children out in the cold. If your children are young, he suggests putting money in a trust with a third party as trustee, until they become adults. This puts a trustee in charge of determining whom the money should go to and how that money should be allocated based on the wishes of their client.
2. Have your spouse obtain term life insurance, with you or your children as beneficiaries as part of the divorce settlement. Ashe says when a person dies, they no longer are responsible for child support payments. A term policy would provide money needed to fill that void. Ashe says the policy could be for five to 15 years, depending on the age of your children at the time of divorce, making it relatively inexpensive, especially if your spouse is healthy.
3. If your divorce agreement does require life insurance benefits for you, check annually to make sure the premiums are being paid, the policy is still in force and you are still the beneficiary. Ashe says the insurance company should send a notice if the premium is about to lapse.
4. Don’t forget group life insurance benefits through your employer. Ashe says people often forget to change their beneficiary on these policies after divorce, which means the children could end up being disinherited.
5. Buy long-term care insurance. Because women usually live longer than men, more of them end up in nursing homes, which could cost $6,000 to $7,000 a month, Ashe says. This would ensure you don’t end up impoverished in your final years.
This article was originally published by Consumer Insurance Guide
