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Dealing with insurance matters during a divorce

Even a fairly amicable divorce can be stressful for Colorado couples. After all, there are many topics that need to be addressed as a marriage ends. One that often gets pushed to the back burner is insurance. Nonetheless, it's still important for divorcing spouses to be aware of how a change in marital status can affect insurance coverage.

The most common insurance issues related to divorce involve health insurance and life insurance. The Consolidated Omnibus Budget Reconciliation Act, or COBRA, is designed to help non-income-earning spouses ending a marriage by allowing them to remain on their former spouse's work-based policy for up to three years. Because this is a short-term solution, a spouse without their own plan may benefit from coverage available through the Affordable Care Act, a private insurer or an employer if they start a new job post-divorce.

Life insurance is another important consideration, especially for a spouse expecting to receive alimony. What life insurance can do is allow payments to continue if the paying spouse dies and the recipient ex does not inherit assets to replace support payments. In some instances, life insurance is required as part of the settlement agreement. When this is the case, the spouse receiving support may be advised to create the policy and make the required premium payments. Doing so could minimize issues with coverage lapses or other potential issues.

A divorce lawyer is likely to recommend that insurance changes be made before a marriage is officially over if spousal support is part of the negotiation efforts. If the paying spouse is not able to obtain coverage, it's also easier to modify the settlement agreement before a divorce is finalized. An attorney may opt to call on a forensic accountant to help identify and assess polices created during the marriage so that appropriate adjustments can be made.

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