Divorce requires many changes in the lives of everyone it touches; from husbands and wives to the children involved. Important decisions of many kinds must be made, from living arrangements, to child custody, financial agreements and changes in insurance. One aspect that is important not to overlook is the changes in insurance policies that flow from separation and divorce, including health, term and whole life policies, disability, household insurance, auto and other vehicles. Every kind of insurance that was acquired during marriage must be readjusted and settled to meet the needs of each party involved. The North Carolina divorce lawyers of Gailor, Wallis and Hunt explain that insurance benefits are one of the most important issues to resolve when going through divorce. The attorneys at Gailor, Wallis & Hunt highlight an article titled, “Divorce adds fuel to changes in insurance coverage,” published in the San Gabriel Valley Tribune, to explain the necessity of covering your bases on insurance issues when going through divorce.
As the article points out, “a close connection between ex-spouses continues in regards to financial issues,” after the decision to divorce is made. As insurance policies are typically issued on the basis that those covered are members of a nuclear household, it is typical for one spouse to hold one type of insurance, such as health, while the other holds another, such as disability. Whether one spouse can be required to pay insurance costs for another is a question of state law. With regard to life insurance, there are two aspects that divorcing parties must consider: first, whether the death benefits of a life insurance policy are considered a distributable marital asset, and secondly, whether a court can require the supporting spouse to insure himself or herself for the benefit of the other spouse who will be receiving child support or alimony.
In North Carolina, life insurance benefits are not a distributable marital asset, and a court cannot require the supporting spouse to pay the premiums on a life insurance policy to benefit the other spouse, in the event of the death of the supporting spouse, the other spouse. However, even though a court cannot compel a spouse to provide life insurance for the benefit of the opposing spouse, if the life insurance policy was acquired during the marriage and has a cash value, the cash value will most likely be an asset that will be subject to division between the parties at divorce. Also, the parties can negotiate between themselves as to whether life insurance will be provided. Be sure to consult an attorney experienced in the aspects of family law and divorce when proceeding with life insurance negotiations.
Secondly, health insurance is a key issue to address during divorce. When a divorce is finalized, a spouse who was covered under the other’s policy may no longer be covered. It is important to ascertain whether the spouse of the employee who holds the primary life insurance policy through his or her employer will be eligible for continued coverage. In certain circumstances, the Consolidated Omnibus Budget Reconciliation Act (COBRA) provides for continuation of health insurance coverage for a divorced spouse, that otherwise might be terminated. Employees with twenty or more employees are usually required to offer COBRA coverage. You may be able to continue with COBRA coverage up to three years. The consent of the employee spouse is not required. A family lawyer can provide guidance towards available options in coverage.
As with life insurance, a court has no ability to require a spouse to pay for a disability insurance policy. Thus, the issue of lost income from a supporting spouse who loses his or her earning capacity due to illness or injury is a very real problem. This issue should be negotiated during divorce proceedings so financial protection can be provided for the dependent spouse and children in the event of injury or illness of the supporting spouse. Typically, disability insurance does not provide for 100% of the gross income that would be lost by illness or injury during the disability period. Of practical importance are the insurance policies covering vehicle and personal property. When one spouse moves to another residence he or she will need to determine if the existing policy will continue to cover personal property moved to the new residence or whether a new personal property policy will have to be obtained. Secondly, the parties will have to negotiate with respect to who will pay for the car insurance and coverage for vehicles titled to or in possession of the other spouse. Frequently, when parties are separated, the primary policy holder will remove the vehicles of the separated spouse from the policy. This could have severe ramifications if state law requires the driver or owner of a car to have insurance in force.
While insurance policies are only a few of the important issues to address during divorce, they remain integral to protecting your best interests. If you are debating divorce, or have already decided to proceed with the process, it is important that each party obtain their own lawyer skilled in family law and divorce.
The highly respected North Carolina divorce lawyers of Gailor, Wallis & Hunt are dedicated to assisting men and women obtain a fair and equitable divorce settlement. GWH offers knowledge, skill and experience in all aspects of family law, including equitable distribution, alimony and post separation support, child custody and support and separation and property settlement agreements.
To contact any Raleigh family attorney at Gailor, Wallis & Hunt, call them at (866) 362-7586, or visit their website at www.gailorwallishunt.com.
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