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How divorce can affect insurance coverage

For anyone ending a marriage in Hawaii, there are many emotional, practical and financial considerations involved. Because of the complexities of divorce, it's surprisingly easy to overlook insurance-related matters. However, it's still important for couples separating to be aware of how no longer being legally wed can affect their various insurance policies.

It's usually life and health insurance policies that come into play as a marriage ends. With health insurance, it's typically the higher-earning spouse who covers the other one on a plan they have through their employment. A non-income-earning spouse can also continue to be covered on a former spouse's policy for up to three years because of the Consolidated Omnibus Budget Reconciliation Act, or COBRA. Another option is for spouse without their own coverage to see what's available on exchanges established under the Affordable Care Act.

If spousal support will be sought, life insurance can become even more important during the divorce process. This is especially true if the paying spouse passes away. With situations like this, life insurance may be used to maintain the flow of payments unless a recipient spouse inherits assets from their ex that are substantial enough to supplement alimony income. Life insurance could also be a requirement stipulated in a settlement agreement. Should this be the case, the recipient spouse may be advised to establish the policy and make the premium payments to avoid lapses in coverage.

A divorce attorney may encourage a client to make insurance decisions and changes during the negotiation process so that any unexpected issues can be accounted for in the settlement agreement. Under certain circumstances, an existing life insurance policy may be considered a marital asset if the spouse required to have this coverage becomes uninsurable. In general, it's advised that couples be aware of all existing policies when the divorce process starts.

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