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Insurance and retirement considerations play important role in divorce planning

Divorce involves much more than just the end of an emotional relationship. When married couple breaks up, there are a number of financial issues that need to be resolved. Chief among these are concerns over insurance and retirement planning.

During the course of a marriage, most people don't pay a lot of attention to things like health insurance, life insurance or Social Security benefits. However, after a divorce, things that once seemed obvious - like being covered under your spouse's health insurance policy - may no longer be an option.

If you are going through a divorce, it is a good idea to discuss insurance and retirement issues with your divorce attorney early on in the process. That way, you can help ensure that your divorce settlement accurately reflects your post-marriage financial needs. Though every divorce is different, there are some broad principles that apply in nearly all cases.

Health insurance

If you were covered under your spouse's employer-sponsored health insurance plan, you will need to find new coverage before your divorce is finalized. If you are employed and your employer offers health care coverage, this may be your best bet. If not, you are likely eligible for up to 36 months of COBRA coverage under your ex-spouse's policy - however, you will be responsible for paying the entire premium, which can be quite expensive. You may want to consider shopping for health insurance on the private market instead.

If your children were covered under your spouse's plan, they will likely be able to continue that coverage, even if the covering spouse does not have primary child custody. You will have to reach an agreement over who is responsible for paying the premiums, though.

Life insurance

The vast majority of married people list their spouses as the beneficiaries on their life insurance policies. Once the marriage is over, most want to change this arrangement.

The timing for removing a life insurance beneficiary is important. You are free to change your beneficiaries after the divorce is finalized or before it has commenced. However, during the divorce itself, there are restrictions on changing life insurance beneficiaries.

These restrictions exist to ensure that divorcing spouses don't inadvertently (or intentionally) deprive their spouses of property to which they are entitled. In addition, it is important to remember that life insurance policies can be very important factors in post-divorce financial plans. For example, life insurance policies can be used to provide for future child support or spousal support payments should something happen to the paying spouse.

Social Security

Retirement planning is another major issue after a divorce. Of course, you will want to work with your attorney to secure your fair share of your spouse's retirement savings, especially if he or she was the primary income earner in your household. In addition, you may be eligible to receive Social Security retirement benefits based on your spouse's earnings.

You will be eligible to receive 50 percent of your spouse's Social Security benefits if both of you are of retirement age (currently 62 years old) and you were married for at least ten years. If you qualify for these benefits, your spouse will not see a corresponding reduction - he or she will get 100 percent of his or her benefit entitlement, and you will get an additional 50 percent.

Working with a divorce attorney

Divorce is complicated, and every situation is unique. If you are going through a split, it is important to talk about these issues with your divorce attorney early on in the process. The attorney will be able to help you evaluate your goals and determine the best course of action.

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