Life and health insurance review during a Florida divorce

Insurance policies are often not at the top of anyone's mind. Direct debits from your payroll or bank account may cover premiums for health and life insurance policies. However, for divorcing couples, failure to consider insurance policies in the divorce process can have negative financial implications.

Many employers provide a basic $50,000 life insurance policy to employees. Do you know who your listed beneficiary is? Even if you have a will, the listed beneficiary generally receives the life insurance proceeds.

Failure to change a beneficiary can have unintended consequences

A recent case that made its way to the U.S. Supreme Court illustrates what can go wrong when a spouse fails to make a change to the listed beneficiary on a policy. A man listed his wife at the time as beneficiary on his Federal Employees' Group Life Insurance policy. Following divorce and a later remarriage, he never changed the beneficiary designation to his second wife.

When he passed away, his first wife received the death benefit. His second wife sued arguing that a Virginia state law favored the current spouse. The ex-wife argued that federal law requires that the named beneficiary receive the benefits. The court in a unanimous decision agreed that federal law controlled. Simple oversight often causes later problems.

Life insurance often secures alimony and child support

Florida statutes allow a court to order a party to purchase a life insurance policy for the benefit of a child or former spouse in some situations. For instance, a Florida alimony award of $1,000 per month for 10 years may also require a $50,000 life insurance policy with the ex-spouse as beneficiary.

When life insurance secures a child support award, it should list the child as beneficiary. The court generally needs to inquire and make findings related to availability, costs and ability to pay before adding the requirement.

Health insurance options

Family health insurance through an employer usually means that one spouse will need to look for his or her own policy. Divorce is a qualifying event for most employer-provided health insurance. For a separating couple with children, the spouses should investigate which employer plan provides adequate health coverage for dependents.

When a spouse has stayed at home to care for children, The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, allows an individual to stay on a former spouse's policy for 36 months. Payment for the full cost of the COBRA premiums may be negotiated during the divorce process.

Soon Floridians will also be able to buy insurance through a health-insurance exchange as part of the Affordable Care Act run through the federal government. Depending on income, subsidies could assist an individual to pay for coverage.

When considering divorce, contact an experienced Florida family law advocate who can provide more guidance and advice. Small mistakes made during the divorce process can easily result in unintended consequences.