Insurance and divorce: How to update your cover after separation

Life insurance after divorce

A divorce or separation changes more than your relationship status; it reshapes your financial commitments and property ownership, and affects the role you play with your dependants. Your life insurance should evolve with these changes to protect the people who matter most.

• Old beneficiaries: If your ex-partner is still listed as a beneficiary, they could receive your life insurance payout in case of your death. 
• Joint policies: Many New Zealand couples have a joint life insurance policy. After separation, this may need to be split or converted into individual cover. You’ll usually need both policy owners’ consent to make any changes.
• New priorities: Divorce or separation can redefine your financial obligations. Budgets often stretch to include child support, a new home loan or rent, being the sole caregiver of your children or taking on more parenting duties and day-to-day costs without another adult’s income to rely on. These changes can increase the financial impact on your family if you were no longer around. Your life cover amount should reflect these increased financial risks, ensuring your children and their carer aren’t left with unexpected costs or reduced financial support if something happens to you.
• Ownership matters: The policy owner controls the policy, not the person insured. This means they decide who the beneficiaries are and can even cancel the policy. If your ex owns your policy, it’s wise to discuss ownership transfer options or consider taking out a new one.

How to review and update your life insurance after separation

1. Check your beneficiaries

Make sure the right people are listed. For parents, this may include your children, guardian, close family member, or a new spouse or partner. If you have young children, you may want to consider establishing a trust to manage their funds until they’re older.

2. Evaluate joint versus individual policies

If you had a joint policy, speak with your insurer or adviser. You may need to split the policy or set up new individual cover so you don’t need each other’s consent when making changes to your policy. Some insurers allow conversion, but both owners must agree.

3. Adjust your cover amount

When recalculating how much life cover you need after a separation, think about:

• Your new expenses: child support, living costs, home loan or rent, and other personal debts
• End-of-life costs: funeral costs or final expenses your family may face, although many life insurance plans already include a funeral benefit
• Future needs of your dependants: ongoing living costs, schooling or tertiary education, and other long-term support your children or other dependants would need to live comfortably if you pass away. If your ex contributes to some of these costs, or you already have significant savings to leave behind, you might choose a lower sum insured.

4. Review other insurance plans

As you reassess your life insurance, take time to review your trauma and disablement cover as well.

• Life insurance pays out only if you pass away or become terminally ill. It doesn’t help if you’re diagnosed with cancer, have a heart attack, or become permanently disabled.
• As a newly single parent or individual, losing your ability to work could put major strain on your finances. Trauma (critical illness) cover and disablement insurance help fill this gap by giving you a lump sum to manage bills, debts, and long-term medical and care needs.
• If you’re not sure what’s right for your new situation, talk to a Policywise adviser. We can walk you through options like standalone trauma or disablement cover, or accelerating these against your life insurance.

5. Request policy changes

Contact your insurer or adviser to update beneficiaries, adjust your sum assured, or make other amendments. 

Health insurance after divorce

When a relationship ends, your health insurance setup can shift, especially if you were covered under a joint or family plan or your former partner’s group insurance plan. Taking time to review your cover helps you stay insured, continue medical treatment without interruption, and prevent unforeseen healthcare bills.

Why review your health cover

• Policy ownership: While some couples may have joint health insurance plans, others may have their medical cover under a single policyholder. If your ex-partner was the policy owner, or your health cover is through their employer, you could be removed from the plan after your separation. You also can’t make changes to the health insurance plan or submit claims on your own.
• Children’s cover: Family health insurance policies often include children. After a separation, you’ll need to decide which parent will include the kids in their cover. This can impact who pays premiums, who needs to file claims if the child gets sick, and who has access to personal information.
• Privacy concerns: If your ex remains a policyholder, they may still have access to your claims history and other personal information. Splitting the policy ensures privacy for both sides.
• Financial changes: After a divorce, your income and expenses often shift. You may need to adjust your excess, benefits, or plan type to match your new budget.
• Continuity of care: Reviewing your health insurance helps protect your important entitlements, including cover for ongoing medical treatments, accepted pre-existing conditions, completed waiting periods, and loyalty benefits. It also ensures you and your children can stay with the same doctors, specialists, and facilities, avoiding the disruption that can happen if cover lapses or changes. 

How to review and update your health insurance after separation

1, Check your policy ownership

Refer to your policy certificate or contact your insurer or adviser to determine who the policyholder is and what cover you currently have. 

2. Inform your insurer or adviser that you’re separating

Contact your insurer or adviser and let them know that you’re separating. You can usually split a family policy into two, allowing you and your former partner to manage your cover and payments separately.

3. Assess your benefits and excess

With your new situation, you may want to adjust your plan. You may be considering adjusting your health insurance excess or adding extra benefits, like specialist cover or dental cover. An adviser can help you compare your options and explain their impact on the terms of your cover, including waiting periods and exclusions.

4. If you’re struggling with premiums, talk to your insurer or adviser early. They can help you find ways to stay covered while keeping costs down.

5. Set up a new individual policy

If you were previously under your ex’s plan, you’ll need a new one in your own name. Check whether your insurer will allow you to retain waiting periods, cover for pre-existing conditions, and other current benefits if you get a new policy soon after the split.

6. Review your children’s cover.

• Decide whether the children stay on your policy, or your former partner’s, or if you’d prefer getting a child-only health cover. Please note that only the policyholder can make changes or see medical details of the children and anyone else on the policy, so discuss privacy and decision-making early on.
• Consider discussing policy setup options with your insurer or adviser. They can help you evaluate the pros and cons of each option and what these may mean in terms of your children’s cover for pre-existing conditions, stand-down periods, exclusions, costs, and other important factors.

7. Update contact and payment details

Ask the insurer to update your contact details so you don’t miss important notices or claims approvals. 

To avoid missed payments and policy cancellations, ensure your premiums are paid from your own account, not a shared one.

Income protection or mortgage insurance and divorce

Separation can leave you carrying more financial responsibility - rent or mortgage payments, childcare, and daily expenses - on a single income. Reviewing your income protection and mortgage insurance after divorce helps ensure you can stay financially secure if you can’t work due to illness, injury, or redundancy.

Why review your income or mortgage protection cover

• Loss of shared income: Without your partner’s earnings, you may be more financially exposed if a critical illness or injury forces you to stop working. 
• More financial responsibilities: You might now be paying rent or a mortgage on your own, plus childcare costs, living expenses, and debts that were once shared.
• Outdated cover: Your current benefit amount or payment term may no longer be enough to meet your new living costs.
• Ownership and beneficiaries: If your ex-partner is listed as the owner or beneficiary of your policy, they could control or receive your benefits.

How to review and update your income or mortgage insurance after separation

1. Update policy setup and ownership

Find out if your income or mortgage cover is joint or individual. Some insurers allow separation benefits, letting you split policies without reapplying from scratch.

If your ex is still listed as policy owner or beneficiary, ask your insurer to update this. Also update your payment information to ensure your premiums are deducted from the correct bank account.

2. Reassess your financial needs and cover amount

Calculate your new monthly expenses, like rent or mortgage repayments, utilities, living expenses, and childcare. Make sure your income or mortgage protection benefits are enough to cover these expenses if you’re unable to work. Adjust your benefit amount if needed.

3. Consider new cover if you were previously uninsured

If you previously relied on your partner’s income and didn’t have income or mortgage protection, now’s the time to consider getting cover, especially if you’re the sole earner and have dependants.

4. Seek professional advice

A Policywise adviser can help explore your options, make adjustments to your existing cover, or compare policies that suit your new circumstances and budget.

RECOMMENDED READINGS

Personal insurance

What type of insurance do I need?

Is disability insurance worth it?

Is trauma (critical illness) insurance worth it?

How to plan and save for your retirement

Policywise: your partner for post-divorce insurance support

Divorce is already stressful. Reviewing your insurance doesn’t have to be.

Policywise advisers can help you:

• Review existing insurance policies
• Update beneficiaries to reflect your true wishes


• Split joint policies or switch to individual cover


• Recalculate cover amounts based on your new life stage.



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