3 Insurance Moves to Make ASAP Following a Divorce

Don't put these tasks off for too long.

Divorce takes a financial toll as well as an emotional toll. There's a lot to sort out when separating a couple's assets, and while lawyers can be a big help, there are still plenty of tasks that newly divorced individuals have to take care of on their own. That includes most insurance-related matters.

They may not be on the top of most people's post-divorce to-do list, but the following three tasks definitely deserve a place on there. Make time for them as soon as possible to avoid gaps in coverage or other headaches.

1. Update life insurance beneficiaries

Many people choose their spouse as their primary life insurance beneficiary, but when a couple gets divorced, they probably don't want their ex to inherit the death benefit if they were to pass unexpectedly. However, that's exactly what will happen if they don't update their beneficiaries.

It's usually not too difficult to do this. If the life insurer doesn't permit the policyholder to make this change online, they can do so by contacting the company directly. For couples with children, naming them the new beneficiaries is often the easiest solution. Otherwise, the policyholder can choose a different family member or friend. And if they don't feel they need a life insurance policy anymore, they can always cancel it instead.

2. Review home and auto coverage

Newly divorced people will have to purchase their own home and auto insurance coverage to replace their previous shared coverage. Often, this is as simple as getting new quotes and choosing the company that offers the best deal. But it may require a little more thought for some.

It might be possible to get by with less coverage in some cases. For example, if the couple's homeowners insurance policy included an endorsement for one spouse's expensive jewelry, the other spouse may not need this on their new policy. Similarly, if one person is moving from a home to an apartment, they may be able to ditch their homeowners insurance for a much more affordable renters insurance policy.

It's important to note that each company weighs the various factors in an insurance application differently, and some couples might see their premium costs rise a little compared to when they were married. Many auto insurers, for example, give discounts to married couples because they're perceived as less risky drivers.

3. Seek out new health insurance

Normally, it's only possible to get a new health insurance policy during the open enrollment period at the end of the year. But divorce qualifies people for a special enrollment period. This enables newly single adults to choose a new policy to cover them after they lose their existing health insurance.

As with home and auto insurance, shopping around is the best way to find a great deal. Compare plans on more than just cost. Eliminate those that don't cover needed prescriptions or nearby hospitals to reduce the risk of surprise out-of-pocket bills. And consider opting for a higher deductible to keep premium costs down.

If it feels too overwhelming to do all these tasks at once, split them up. Focus on one at a time, but don't put them off for too long. Accidents can happen at any time, and having the wrong insurance can make handling it much more complicated.