Separation, Divorce and Personal Insurance Considerations

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Presented by Christopher F. Hawthorne, CPCU, CIC

Separation and divorce can be a stressful and emotional time, even with divorce lawyers in Jonesboro Arkansas handling the majority of the paperwork. Many complications and issues can arise at any time, emotions can make it difficult to process tasks and facts, and divorce marks a permanent change in life that cannot be reversed.

During the period of separation and divorce, several issues arise in terms of one’s insurance program. Unfortunately, the untangling and restructuring of an existing insurance program can be very confusing and is often overlooked. Although sometimes consulting a family law expert like Jennifer Croker could be useful, as is speaking to an insurance company about your separation can also be beneficial. As an insurance program is rebuilt in what can be a hostile environment it is important to concentrate on coverage, control, and accuracy issues.

The following attempts to highlight issues pertaining to personal insurance coverage involved during separation and post-divorce. For insurance purposes, the work begins when someone leaves the primary residence with no intention of returning in short order (one or two weeks). It is helpful to remember that insurance policies are name and location-specific legal contracts. While not flexible, they can be molded to fit your needs if care is taken throughout the process.

HOMEOWNERS, CONDO OR RENTERS

SEPARATION: When a spouse leaves the primary residence, if they have an ownership interests, the departing spouse should check with the agent periodically to make sure coverage is kept in force. This will help protect what may be the most valuable financial asset in the relationship.

Once a new residence is established for the relocated spouse, a tenant’s policy should be purchased to protect this spouse’s personal liability and personal property. The language in a homeowner’s policy states that liability protection is excluded for an additional premise rented to an insured. Therefore, the relocated spouse will need a tenant’s policy for protection. The cost of a renter’s policy(HO4) is minimal, often less than $200 per year.

At the same time, the homeowner’s policy limits personal property coverage to 10% of the current homeowner’s policy for additional premises occupied by an insured. If the new residence exceeds the 10% value, the new residence should be insured by the new tenant’s policy. Additionally, the departed spouse if depending on the existing homeowner’s policy may not want a loss payment issued in both names. A renter’s policy will solve this problem as well.

POST – DIVORCE: Once the divorce is finalized and the deed changed, the stationary spouse should have the homeowner policy changed to remove the departed spouse’s name. Also, pay attention to scheduled property as the owner may have changed and coverage may no longer be needed.

PERSONAL AUTO

SEPARATION: This is a very tricky area as autos are titled and until the autos are retitled, liability for both owners is in play. The safest move is to:

1) Change the garaging address of an auto if the moving spouse changes towns.
2) Add all drivers to the current auto policy (including new significant others/household members in either household) as traumatic as this might be.
Note: If there are young drivers involved while determining financial considerations for post-divorce, remember to address which parent will act as the primary auto policy for the young driver. This can be quite expensive and should be determined before the divorce is finalized.

POST – DIVORCE: The autos should be retitled. Once retitled, the drivers listed may be limited to the drivers and household member of each individual.

UMBRELLA

SEPARATION: As with the auto, all new locations, drivers and autos should be added to the current umbrella.

POST – DIVORCE: A new umbrella should be purchased for the moving spouse and then exposures may be limited to only those locations, drivers and auto of the individual.

GROUP PLANS

SEPARATION: Contact the plan administrator to discuss the situation to see if any changes must be made. A departing spouse may be moving out of the Group Health territory and changes could be required.

POST – DIVORCE: The group or plan administrator at the spouse’s place of employment should be notified of any new addresses and any change in beneficiaries. The administrator will then notify the various plans of the needed changes.

Note: Having a divorce decree that is clear on who will be responsible for providing and paying for group health coverage will be quite helpful. The divorce decree should also address if the providing ex-spouse gets remarried. Will the ex-spouse providing coverage be expected to also ensure both the ex-spouse and the new spouse as well as children? The group health carriers and employers will look to the divorce decree for instruction.

LIFE & DISABILITY

SEPARATION: Agents should be notified of new addresses and any change in beneficiary requests. If divorce decree calls for mandatory life insurance, consider having ownership of life insurance be held by each ex-spouse to insure control of payments and benefits.

POST – DIVORCE: Finalize any changes in beneficiaries as needed.

SUMMARY

Just as it took a team to build the financial structure pre-separation and divorce it will take a team to navigate what can be a perilous period in terms of both parties’ financial well-being. As stated earlier, insurance policies are not very flexible and if not addressed appropriately, a person might discover they do not have the needed protection.

Finally, it may be a good idea for each spouse to obtain their own advisors rather than rely on the ones that were in place before the separation. There is an inherent conflict of interest in this situation and each spouse should have an advisor that is looking out for their individual interests alone.

5 Things Millennials Should Know About Life Insurance

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Regardless of how well prepared you think you are for adult responsibilities, there is always room for improvement – especially when it comes to life insurance. For millennials, life insurance may not feel like a totally immediate concern; however, it is the type of insurance that is too often underestimated and even more complicated than many people anticipate.

Whether or not you think you need it, it’s time to prioritize arranging your coverage. But we know this can be a confusing process, so we’re here to make it easier.

Below are five things that all millennials should understand about life insurance:

  1. Life insurance can help family avoid bankruptcy. Life insurance is often thought of as money that will be inherited from a parent or guardian once they pass. However, life insurance might also help in covering the expenses that would normally fall to those who are responsible for making arrangements. You could look here for more information.
  2. Student loans don’t disappear. Believe it or not, your loans don’t go away if you die. If you have Federal student loans, your loans will be discharged and your family will not be responsible for your debt; however, private loans will be inherited by your family. The last thing your family needs are debt collectors harassing them in their moment of grief.
  3. Life insurance is cheaper the younger you are. At this age, you can buy a quality life insurance policy for less than the cost of a commuter pass – especially if you don’t have big expenses to cover after you’ve died. As you get older and your health risks increase, you’ll pay more.
  4. Life insurance may be part of your employee benefits. Take some time to assess your benefits package because many employers offers life insurance as part of it. That said, if you plan to switch jobs in the next few years, it will be worthwhile to obtain an individual policy as well.
  5. There are many different types of life insurances to consider. Millennials should know that there is not one type fits all when it comes to life insurance. At Cleary, we offer a variety of categories under life insurance. These include, Whole Life Insurance, Term Life Insurance, Disability Insurance, Long Term Care, Key Employee Insurance and Buy Sell Insurance.

We are here to answer your questions. Contact us at any time, and we will be happy to assist you.

The Skinny on Life Insurance

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If you have any dependents that fall under your responsibility – children, spouse, a special needs adult – it may be time to have the life insurance policy conversation. It’s not always a pleasant thought, but it’s certainly necessary to consider if you are the primary caregiver to another person. In the event of your death or serious illness, the money needed to support loved ones comfortably in your absence can hard to come by and having a policy in place beforehand will make it easier.

At Cleary, we make sure that a life insurance policy is tailored to your specific wants or needs. The two most common types of insurance are term and whole life insurance, both of which can benefit you and your loved ones in a variety of ways.

Term Life Insurance, often regarded as the simplest and least expensive plan, provides coverage for a fixed period of time and typically may be renewed after the initial contract term expires. However, this offering does not provide savings.

On the other hand, Whole Life Insurance provides life insurance protection for as long as you live. Whole life policies also provide for the accumulation of cash value on a tax-deferred basis which can be used when you need it, to help with life’s opportunities.

Again, we know it’s not the prettiest thought, but it can be a comfort to know that the money afforded through these plans can help your family’s daily living expenses, the mortgage of your house or debts, and so on.

4 Questions to Ask Yourself When Considering Renter’s Insurance

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When most people think about insurance, they associate it with buying a car or home. Renter’s insurance is often overshadowed in this way. Even though renter’s insurance is not always required, it’s still important when considering the net worth of your personal items.

At Cleary, we recommend renter’s insurance so that you’re protected against the damage or loss of personal property when you rent an apartment or house and have liability protection in case any lawsuits are made against you.

For example, if someone gets hurt on your rented property, and he or she decides to sue you, renter’s insurance will likely pay for both the injured person’s medical expenses as well as a lawyer.

Sounds pretty good, right?

Here are a few questions to ask yourself when you consider renter’s insurance:

  1. How much would it cost to replace my belongings if they were damaged or stolen?
  2. Could I afford to replace them?
  3. Do I live in an area prone to theft or other destructive forces?
  4. Can I afford Replacement Cost* coverage over Actual Cash Value (ACV)**?

* Replacement Cost refers to the cost of replacing lost or damaged items

** ACV involves the monetary reimbursement for what the item would have been worth by an insurance company.

If you’re still having trouble deciding, contact us and we’ll give you the skinny on renter’s insurance.

Insurance for Your College Student

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Renters Insurance
So you’ve kicked off your kid’s college career with a new laptop and some other expensive high-tech gadgets. Now it’s time to follow up to ensure his or her property is safe in the event of theft, fire or other mishap.

In general, protecting a student’s personal property boils down to a simple rule: If your child is living on campus and going to school full time, your homeowners, renters or condo insurance policy (including liability protection) will cover his or her gear. But if he or she moves off campus, your policy most likely won’t protect his or her assets. Ditto if your students starts taking fewer classes.

Kids who change their permanent home addresses on such legal documents as driver’s licenses or tax returns (say, to qualify for in-state tuition at a public university) are no longer considered official parts of your household. They’ll need their own renters insurance.  Students who rent a shared apartment will need insurance, too, but be aware that they might have a tough time getting it. That’s because insurers might not sell a policy to a student unless everyone in the household has his or her own policy, too.

Auto coverage
Congratulations if your college student left the car at home. You might have some savings coming to you. But to get it, your student’s school needs to be at least 100 miles away. If you meet this criterion, give your insurer a call. You’ll generally receive about 10 percent off your premium.

Did your child leave with the car?   It is important to call your insurance broker and discuss your options.  The insurance carrier could conceivably raise your rates if the vehicle’s moved to a different location.