SERIES: Recently divorced or widowed. Five step series to protecting your finances.

Part 4

Losing a spouse through death or divorce can be an emotionally devastating experience. And yet it’s typically a time when many financial matters require your immediate attention.

To help avoid making emotionally driven – and potentially harmful – financial decisions, it’s important to be prepared should you find yourself suddenly single. Here are five important action steps that can help protect your personal finances.

4. Evaluate your insurance needs.

What you’ll have and what you’ll need for insurance can change dramatically when you lose a spouse through death or divorce. It’s important to take a careful look at all the different types of insurance that are available, to see where you may need to adjust your coverage. Be sure to review the following:

Life
If you are the surviving spouse and the beneficiary on your deceased spouse’s life insurance policy, you will typically receive the proceeds, tax-free. But if you are still caring for children, you may want to either purchase or increase your own life insurance coverage to make sure they will be protected in the event of your death.
If you divorce, you have to consider (1) changing the beneficiary on your life insurance, if it is currently your ex-spouse, and (2) purchasing or modifying your coverage to adequately protect your children if either you or your ex-spouse dies.

Health
Even if your spouse carried your family’s health insurance coverage, you should be able to continue it for a period of time, whether you are divorced or become widowed. Talk to an insurance expert to ensure you have adequate coverage to meet your unique needs.

Disability
What if you were injured or sick and couldn’t go to work? Disability insurance is designed to protect you and your loved ones against loss of income.

Long-term care
If you’re in your 50s or older, you may want to consider buying long-term care insurance to help keep potential costs of nursing home stays and home health care from depleting your income resources if you become seriously ill or injured.