Getting Divorced? Already Divorced? How to ensure your financial protection

There is enough to worry about when resolving the issues surrounding a divorce. Emotional strain, concern for future relations with family and friends are often just the beginning. Many fear a radical adjustment to their standard of living. Financial instability/insecurity need not be as great a worry as you might think. With a little planning and some expert advice, you can ensure that your future is protected. My team of financial planners can help you get through your divorce, or revisit the terms of your settlement and prevent appeals and/or additional protracted litigation, and advise you about how to eliminate your economic worries.

As you can read in my Conduct and Spousal Support article, some form of support is usually granted to one spouse when a marriage breaks down, but there are issues that can arise in the future that you may not have considered.

Disability:
Most people have life insurance. If a payor spouse dies, there is usually coverage in place to protect the ex-spouse if that is part of the support agreement. What my clients often do not consider, though, is that people are three times more likely to become disabled before they die than they are to die without that preceding disability. Most of us don't plan for this. People often have disability coverage through their employment, but usually the insurance only accounts for the employee's salary or a portion of his/her salary. Individual plans can cover salary, bonuses, benefits, and perks. This is one way to protect all the aspects of the settlement that should continue to be accounted for in the event that the payor spouse becomes disabled.

Critical Illness:

This is another issue that people often overlook when they think of divorce settlements. Again, if a payor spouse becomes critically ill, his/her ability to continue paying support may be jeopardized.

My financial planners are the largest brokers in the country selling critical illness protection and have never had a claim that wasn't paid. Payment is provided in a single cash amount within 30 days of the diagnosis of certain diseases. There are currently 22 illnesses considered "critical.” These range from heart attack and stroke to cancer, blindness, Alzheimer's Disease and loss of limbs, just to name a few.

When someone is diagnosed with a critical illness, there are four things he/she should be prepared for:

  •     his/her health will become the priority
  • OHIP will not provide a second opinion before treatment begins, and they will not cover the costs (elective)
  • he/she will follow a treatment protocol
  • he/she will need financial support for indirect costs

Priority:

When someone's health is compromised, that issue becomes the focus of his/her life. It affects every aspect of living and the potential financial burden can worsen the situation enormously. The right plan can alleviate this concern.

Second Opinion:

In order for OHIP to cover costs associated with the treatment of a critical illness, they require that the patient provide a second opinion, but OHIP doesn't pay for it. As you probably know, getting another opinion can involve a lengthy wait time. Should the patient decide to seek this opinion in the United States, he/she most likely won't have to wait, but can expect to pay $2,000 USD ($1,000 to the facility and $1,000 to the specialist).

A critical illness plan includes a program called Best Doctors™ that will arrange timely appointments with top specialists on a priority basis. The cost of the second opinion is covered.

Treatment Protocol:

Treatment for a critical illness can be very expensive and it can be intermittent. There are certain treatments that the patient's employee benefits might not cover. Again, the right insurance can protect you against these unexpected costs.

Financial Support for Indirect Costs:

There are many other expenses associated with critical illness for which people often don't account. The payor spouse, for example, might suffer income loss from time taken off work; child care may become an increased requirement. These are just two examples.

Most people also prefer to have someone with them at their appointments and during treatment. Employee health plans don't pay for two plane tickets, for example, or hotel rooms, etc. I thought it appropriate to mention that in my financial planners' experience, it is often the ex-spouse who accompanies the patient. They cite one heart-warming example in which an ex-spouse became the primary care giver for the other ex for nine years. Regardless who the companion is, though, most people take comfort in knowing they won't have to go through some difficult aspects of the illness alone because they can't afford it.

A Few Words About My Financial Planners:

Anyone who has been or is going through a divorce knows that you can't always predict your future. But, you can prepare for it. That's why, for example, I advise my clients to sign cohabitation and marriage agreements. Predicting the future after divorce doesn't get any easier. That's why I recommend people ask me about these services. As I do, the people I hire on your behalf care about their clients.

My financial planners are able to insure both spouses for whatever coverage is required. They function as intermediaries and can consult with you and your ex-spouse individually or together, as you prefer. Often money and benefits are the key contentious issues in a divorce settlement, but I can refer you to professionals who can put a plan in place that can lessen that strain-and keep you and your ex out of court. Settle, Don't Fight!

They can offer you coverage that, unlike employer plans, will continue to provide benefits to ex-spouses in the event that the payor spouse loses his/her job. Furthermore, this coverage, also unlike employer plans, provides benefits to ex-spouses after divorce. Normally, ex-spouses are eligible to receive benefits only while they are legally separated from the payor spouse. Once they are divorced, though, they lose that eligibility. In our experience, many people are reluctant to finalize the end of their marriage with a divorce because they are afraid of losing coverage provided by their ex's benefits package. As a result, these people often have trouble moving on with their lives because though they are legally separated, they are not divorced. That status can encumber their ability to develop new relationships. As well, many people find it difficult to become close to someone who has been legally separated for a prolonged period of time and has not got divorced.

The financial planners can advise you in these situations about ownership and payment of your policy-the owner and the person paying, for example, don't have to be one in the same. The planners will work out the arrangement that suits your circumstances best. If you don't want your spouse to receive (and then submit to you) the reimbursements for you or your children's dental work, for instance, the planners can deal with that for you.

They will make sure the coverage is bona fide, that the money will arrive when it's supposed to, and they'll make sure there's enough. These are services that can make even the most difficult divorce a little easier.

Revised March 2015