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Types of insurance that could be affected by divorce

Texas couples untying the knot typically go through a series of emotional, logistical and financial adjustments, so it's easy to overlook things like insurance policies that were created during a marriage. While all policies with a soon-to-be-ex should be reviewed and appropriately adjusted, health insurance and life insurance are the types of coverage that tend to be affected most by divorce.

It's common for a non-income-earning spouse to be covered on their spouse's employer-based health insurance plan. Even if both spouses work, the higher earner may include their spouse on their policy. An uninsured or non-income-earning spouse could apply for COBRA benefits to remain on their ex's plan for up to three years post-divorce. However, this may not be the most cost-effective solution for the spouse paying the premiums. An uninsured ex may find more affordable, long-term coverage through state ACA exchanges.

Life insurance beneficiary designations may need adjusted if there's a desire to completely remove an ex-spouse from a policy. Life insurance may also come into play if spousal support is being requested since payments typically end if a paying spouse dies, but alimony may continue with policy payouts. This type of insurance is sometimes a requirement in a settlement agreement. Should this be the case, it's generally advised that the recipient spouse create and maintain the policy to avoid unexpected changes or lapses in coverage.

Because each marital situation is unique, a high-asset divorce attorney may start with a review of all existing policies to determine what adjustments need to be made. A lawyer is likely to recommend setting up life insurance before the divorce is final so that modifications can be made if a spouse required to have coverage turns out be uninsurable. In some instances, the policy may be considered a marital asset.

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