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NEW YORK, October 9, 2014 — Financial security and access to resources can make all the difference to domestic violence victims when deciding to leave an abusive relationship. And insurance is an important component of financial planning that can help survivors move forward, according to the Insurance Information Institute (I.I.I.).
“Financial abuse is a common tactic used by abusers to gain power and control in a relationship,” said Loretta Worters, vice president, I.I.I. “Victims are often isolated, exploited and prevented from developing the financial skills necessary to achieve independence. That’s why it is so important that survivors understand how insurance works and what a critical role it can play in gaining financial freedom and economic self-sufficiency.”
In support of Domestic Violence Awareness Month, the I.I.I. offers the following financial strategies to protect yourself before and after leaving an abusive relationship:
1. Secure Your Financial Records
Key documents include your birth certificate, drivers license, passport, bank account and credit card information, insurance policies, etc. Keep these documents with a trusted family member or friend, or obtain a bank safety deposit box. Also set up a P.O. Box to conceal all of your important mail from your abuser—this will prevent identity theft or damage to your credit. Change your ATM and debit card PIN codes, as well as your online banking and email passwords. It is particularly important to close any joint banking or credit card accounts before you leave, in case your partner racks up charges that can then affect your credit—as long as there is an outstanding balance on a joint account, both parties are responsible for payment. You can also contact the Social Security Administration if you need to obtain a new Social Security number (SSN).
2. Know Where You Stand Financially
Knowledge is power, and it is important to understand where you stand financially. Find out your main sources of income, bank account balances, property owned and debts owed. If your spouse or partner has had control of the family finances, have your bills—including the premiums on your insurance policies—been paid? A lapsed policy or unpaid credit-card bill could create financial problems down the road, so try to learn as much as possible about your financial position when you are leaving an abusive situation.
3. Build a Financial Safety Net
With a good sense of your financial picture, you’ll be in a better position to plan your exit. Begin with estimating your income and expenses to see if the money you earn right now will allow you to meet basic needs. Also, start a savings plan and create an emergency fund so there is a safety net in place once you leave.
4. Make the Necessary Changes to Your Insurance Policies
Auto Insurance: If you plan to take a car with you when you leave your abuser, you will need to get separate auto insurance coverage immediately. And if you buy a new car, you should purchase a new auto policy before the car is registered. Make sure you are removed from any joint auto policies to protect yourself in the event your former partner is involved in an accident and gets sued. Keep in mind that moving to a different area or state, or changing from being a secondary to a primary driver on a vehicle, can affect your auto policy rates.
Homeowners and Renters Insurance: When you move out of the house, it is likely you will be renting, or even buying, a place to live and will need to purchase a renters or homeowners insurance policy. This will protect you in the event your belongings are stolen or destroyed by an insured disaster. Choose your deductible carefully: With a low deductible you will pay higher premiums, while a larger deductible means you will pay less for the policy, which can be useful if you are living on a smaller income—just keep in mind that you will pay more out-of-pocket if you do have a loss.
If you are installing a security system in your home, let your insurance company know as it may qualify you for a discounted rate.
You may also want to take a home inventory of your belongings, as it can make getting the right amount of insurance and filing a claim much easier. It may also help you in the division of property if you are going through a divorce. The I.I.I.’s free Know Your Stuff® – Home Inventory software and app makes creating and updating a home inventory simple, and with secure, online storage you can access your inventory anywhere, anytime.
Life Insurance: Unfortunately, if a life insurance policy on your own life is payable to the abuser, and you do not own the policy, you cannot change the beneficiary. However, if you do own the policy, you have the right to change the beneficiary, and probably should. With group insurance through your employer or an association, you can also change the beneficiary. If your beneficiary is a child or an elderly parent who has or could develop cognitive difficulties, you should be careful to designate a trustworthy guardian who can file the claim and manage the money on their behalf.
If you have children or other dependents who would be affected financially by your death, it is important to get your own life insurance policy as soon as possible. Opting for term life insurance, which provides protection for a specific period of time, typically offers the greatest amount of coverage for the lowest initial premium cost and can make buying enough coverage affordable.
5. Maintain Good Credit
Having a good credit report is essential to starting a new life—it can help you more easily rent an apartment, obtain a new credit card and get better rates on your insurance. The best way to keep your credit intact is to start making taking steps as soon as possible. Take care of your current debts and avoid missing any payments. Alert creditors if there is a change of address so that bills will continue to be received from all joint accounts and no late fees are incurred. Keep in mind that women who drop their husband’s name and use their maiden name will not erase the credit history established under their married name, as your history is tied to your social security number, not your name. Establish a new credit record under your own name, especially if all previous credit was held jointly with your spouse. In order to expedite this process, consider turning existing joint credit cards, gas cards and retail accounts into individual accounts. Doing this will mean not having to re-establish your credit should you file for a divorce.
Obtain a copy of your credit report and monitor your credit often to see if it has been adversely affected by your partner’s actions—it will show if there are any shared debts that are being neglected and can point you in the right direction when canceling any joint accounts. Most financial institutions provide credit monitoring services, such as Privacy Guard, at low costs. You can get a copy of your credit report by contacting one of the three credit bureaus. Equifax: 1-800-685-1111 or www.equifax.co; Experian: 1-866-966-1067 or www.experian.com; TransUnion: 1-877-680-7275 or www.transunion.com; FREE Annual Credit Report: 1-877-322-8228 or www.annualcreditreport.com.
6. Seek Assistance
The biggest misconception held by people in abusive relationships is that they are alone and cannot get help. If you are in a precarious financial situation, or have limited money management skills, it may be difficult to implement some of the steps mentioned above, but there is assistance available: Local domestic violence programs, libraries, the Internet and faith-based organizations are good places to start. Plan for your safety by contacting a local domestic violence program to discuss your options and learn about the community resources you can access for support (i.e., emergency assistance funds, shelter, utility assistance, rent assistance, public benefits and affordable housing as well as legal aid). To locate a program in your community, contact the National Domestic Violence Hotline: 1-800-799-SAFE.
The National Coalition Against Domestic Violence (NCADV) notes that 85 percent of women who leave an abusive relationship return because of their economic dependence on their abusers. Furthermore, the degree of women’s economic dependence on an abuser is associated with the severity of the abuse they suffer.
“One of the most important factors that keeps victims of domestic violence from getting away is not being able to support themselves financially,” said Ruth Glenn, executive director, NCADV. “Other tactics abusers use that impact financial independence includes ruining the credit of their victim and harassing and stalking them at work until they are fired from the job. The financial education provided by the Insurance Information Institute can be life-saving, and will make a real difference immediately for many, many people.”
White Paper: Economic Abuse: the Untold Cost of Domestic Violence
The I.I.I.’s free mobile apps can help you create a disaster plan, learn about selecting the right insurance for your needs and budget, and create and maintain a home inventory. Learn more about our suite of apps here.
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org