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The Financial Side of Family Transition

Mother holding young son

Protecting Children Against Future Risks

Janene Baedke, Extension Educator; Sharon M. Danes and Jean W. Bauer, Extension Specialists and Professors — Family Social Science; Kathleen Lovett, Extension Educator; Kathryn D. Retting, Professor — Family Social Science; and Patricia Stumme, Extension Educator


Health Insurance

Divorced parents with custody of children can get health insurance for them through their employment-related insurance program, according to a federal law adopted as part of the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Under COBRA, divorced spouses of employed medical plan participants can pay for their own coverage for up to 36 months after the divorce. The premiums you pay can be costly, so check the costs of other health plans before deciding to continue coverage through your ex-spouse’s employer.

Having health insurance for children is important. If you will be the custodial parent, don’t overlook these expenses during your divorce negotiations. Usually, if one parent has employer sponsored health coverage, he or she maintains the children on that plan.

When comparing insurance plan costs, restrictions, and coverage, it’s helpful to consider the following before consenting to any arrangement under the other parent’s plan:

Children cannot be denied coverage by a noncustodial parent, the parent’s employer, or parent’s insurance company based on any of the following reasons:

Be sure to investigate any possible laws in your state that provide health insurance for children who are not covered by any source. For more information, go to the Insure Kids Now website. For more information on COBRA, visit Continuation of Health Coverage: COBRA on the United States Department of Labor Website.

Life Insurance

As you gather information about life insurance policies, it is important that you understand certain common terms that are critical in the divorce process:

When you divorce, you need to reconsider who should be named the beneficiary of any life insurance policies. Don’t automatically remove your spouse from your policy, however. You may be prohibited from doing so until after your divorce is final. You may also want to keep your soon-to-be-ex-spouse as the beneficiary of your policy if your spouse will need a lump sum of cash to help care for your minor children should you die before they reach adulthood.

Disability Insurance

Your income could be placed at risk if you or your ex-spouse who is paying child support becomes disabled. Disability insurance will protect some of your income should you become unable to work due to illness or injury. If you become disabled, the policy will pay you a certain percentage of income, which will help you pay everyday living expenses to care for your children.

Check to see what type of disability coverage is available to you. You may hesitate to buy disability insurance due to the expense and your perceived lack of need. Consider the harsher reality your children would face, however, if you or the other parent became disabled and unable to work.

Use the worksheet Summary of Insurance Policies (PDF) to help track information about each of your insurance policies.


Danes, S. M. (2009). Planning ahead for retirement. St. Paul, MN: University of Minnesota Extension.

Danes, S. M. & Stumme, P. (2001). Adjusting to suddenly reduced income (PDF). St. Paul, MN: University of Minnesota Extension.

United States Department of Labor. (n.d). Continuation of health coverage — COBRA.

Related resources

Preparing for Unplanned Changes — Eight questions to consider when you are experiencing unplanned changes that may affect you and your children’s financial future.

Categories for Estimating the Costs of Raising Children — This resource helps you understand the different expense categories that the U. S. Department of Agriculture's Costs of Raising a Child Calculator bases its estimates on.

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