We like the option of setting up an individual policy, especially if Tom has the premiums paid electronically from his checking account and Sue's mailing address is on the policy. This way, the premiums are always paid on time, so the chance of a canceled policy and a resulting uninsured claim is reduced. By having Sue's mailing address listed on the policy, Sue gets copies of the policies and changes and any late premium notices if the electronic payment isn't made for whatever reason.

The ideal divorce decree

If you're involved in a divorce and if the court deems you responsible for paying the chil- dren's health insurance costs, and you prefer to set them up on an individual plan, the divorce decree should do more than state which parent is responsible for the premiums. It should spec- ify the type of coverage plan, the deductibles and copayments (and who's responsible for paying them), whether there must be freedom- of-choice for doctors and hospitals, and that the premium payments must be paid automatically and electronically from the responsible parent's checking account. If you follow this advice, you'll eliminate 90 percent of the conflict sur- rounding your children's health insurance.

An individual plan gives the parents more flexibility to determine the cover- age they want on the children. And the coverage won't end if Tom or Sue's job ends, which is safer for the children and much less stressful for their parents.

Deciding on a conversion policy

Most state laws require that people coming off a group policy be offered the right to convert their group coverage to a personally owned policy that they can keep indefinitely, regardless of their health.

Requiring that conversion policies be offered is a good concept in theory, but the policies are seldom practical. Most states don't set limits on how much the company can charge, nor do they prohibit the company from watering down the coverage. As a result, most conversion policies are half the cover- age of the previous group coverage at about twice the price. (Why? Because losses are so high. Usually, only those in poor health exercise the option.) If your state law requires the group insurance carrier to offer you a conver- sion policy with essentially the same broad coverage you had under the group without an increase in price, definitely consider it. Otherwise, avoid conver- sion policies unless you have absolutely no other health insurance option (in other words, you can't qualify medically for a personal policy and your state doesn't have a health insurance pool for those who can't get insurance).

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