Client Resources > Current
INSURING A NEW MARRIAGE
Financial Planning Perspectives, 11/2003
Reevaluating their insurance coverage isn't uppermost on the minds
of most newlyweds, and it won't ensure a long and happy marriage.
But the right insurance can go a long way toward shielding you against
the kinds of financial calamities that can strain and sometimes
break a marriage.
Here are several key insurance areas CERTIFIED FINANCIAL PLANNER
professionals recommend that newlyweds (and other marrieds, for
that matter) review.
Life insurance. It's a given that couples should have life
insurance if they have or expect to have children, or if one spouse
earns most or all of the couple's income. But it is often suggested
that life insurance is not needed where couples have no dependents
and where both spouses work in comparable-paying jobs. This may
be suitable in some cases, but you may still want to consider additional
life insurance beyond what is offered at work.
First, working couples typically raise their standard of living:
a bigger apartment or house, nicer cars, new furniture, vacations.
So the question becomes, if one of them dies, will the survivor
be able to afford to maintain the higher standard of living on his
or her own salary? Probably not-unless each has sufficient life
insurance to cover the gap.
Second, one or both spouses may bring debts to the marriage, such
as student loans or credit-card debt. The surviving spouse probably
won't be responsible for debt accumulated by the deceased before
the marriage (though there can be complications in this area). But
the deceased's estate would have to pay off the debt, thus leaving
less for the survivor. The couple also may accumulate new debt together
that the surviving spouse may find difficult to pay off without
Third, life insurance may be necessary to cover funeral expenses
and possibly out-of-pocket expenses incurred from medical treatments
associated with the death.
The fourth advantage of getting life insurance early for many newlyweds
is that they can lock in low premiums while they are young and healthy.
Lastly, while group term insurance is probably available at work,
it can't go with you if you leave your job, and it often is inadequate.
Also, you don't want to need additional life insurance at a time
when you're uninsurable for an individual policy.
Rename beneficiaries. If either one or both spouses bring
existing life insurance to the marriage, they'll probably want to
name their new spouse as beneficiary. Otherwise, death proceeds
could end up going to an ex-spouse or parents.
Disability insurance. Competing with life insurance premiums
dollars are other insurance needs for newlyweds, and high on that
list should be disability insurance. This insurance is designed
to partially make up for lost wages should you not be able to work
because of an injury or long-term illness. Statistically, young
people are more likely to suffer a lengthy disability than to die
Group disability coverage at work typically is not sufficient,
so you may want to augment it with a private policy. While any worker,
single or married, should consider this, it becomes even more important
when you have a spouse, particularly one who may be dependent on
Health insurance. Married working couples should review
their individual health plans at work to see if they want to go
with coverage under only one employer and possibly save premium
dollars, or in some other way coordinate coverage between the plans.
Auto insurance. Couples will probably want to insure their
autos with a single company in order to get a multi-car discount.
Married drivers usually can get lower rates, too, so be sure to
tell your agent you've gotten married. Coordinating other property
and casualty insurance with the same carrier also can save premium
Homeowner's or renter's insurance. While this is coverage
you should get even when you're single, it becomes more critical
when you get married. For one thing, you're likely to start accumulating
more expensive possessions that you want to be sure are covered.
For some valuables, such as the wedding ring, you may need to insure
them with a separate rider.
Don't overlook renter's insurance. Newlyweds commonly live in apartments
or rented houses before buying their first home or condo, yet they
often mistakenly believe that the landlord's insurance will cover
damage to their personal property. Renter's insurance is inexpensive
and easy to get.
November 2003-This column is produced by the Financial
Planning Association, the membership organization for the financial
planning community, and is provided by Marnie Aznar, MBA, CFPÒ,
a local member of the FPA.