Newly married couples have a lot of financial changes to consider, including what to do about insurance. Getting married means combining your belongings and financial responsibilities, so naturally, the way you protect them from risk must change as well. You likely already had various types of insurance prior to getting married, depending on if you own a car or a home, or work for a company that provides insurance benefits. When getting married, both you and your partner need to decide what changes to make to your existing policies, if any, and which new types of insurance may apply to your new life together.
Health Insurance
If you participate in your employer’s health insurance benefit, you’ll most likely have the option to add your spouse to your policy once you’re married. Similarly, if your spouse also has access to an employee health insurance benefit, he or she will have the same option to add you. (Keep in mind that some employer benefits will not apply to a spouse who has the option of receiving health benefits from his or her own employer.) The best way to decide whose health insurance benefits should be used for whom is to compare the plans’ details including copays, deductibles and premiums. See whether it is more financially advisable to put both spouses on one plan, both on the other or keep your health insurance separate, each through your own employer. If you have children or other dependents, you’ll have to consider them when evaluating your health insurance plans.
You might have the choice between a traditional health insurance plan and a high-deductible plan with a health savings account (HSA). A traditional plan covers a percentage of your preventive care and medication, and you’ll pay a copay to cover the rest of the cost. For other medical expenses, your plan covers anything over your yearly deductible. In a high-deductible plan with an HSA, your deductible is much higher, but you can use pre-tax dollars to fund an account to be used for health expenses. Once you meet your deductible, most medical costs are typically covered at 100 percent. There are no copays in a high-deductible plan, so you’ll have to use your HSA to pay for doctor visits and medication, too.
Auto Insurance
A married couple is less of a claims risk than two single people, so many newlyweds enjoy lower premiums when they alert their carriers of their changed relationship status. It’s likely beneficial to combine your two vehicles’ coverage onto one insurance plan in order to take advantage of lower rates and bundling discounts. If this is the first time you’ve sought auto coverage apart from your parents, here are some things to keep in mind:
Does your plan include uninsured and underinsured motorist coverage in case you’re involved in an accident with someone who doesn’t have adequate auto insurance?
Do you have proper liability coverage? If you’re found liable for someone’s injuries in a car accident and don’t have adequate liability coverage, you’ll have to pay their medical expenses out of pocket.
Would your car be cheaper to replace than to repair if you were involved in a major accident? If so, you may want to reduce or eliminate your collision coverage altogether.
Homeowners Insurance
Many first-time homebuyers are also newlyweds, so insuring your new home is likely to be something that you and your spouse must consider in the near future. When insuring your home, you’re not merely insuring your house itself. Homeowners insurance should cover your house, your belongings and your liability should someone get injured in an accident on your property. One thing to note: homeowners insurance doesn’t necessarily include coverage for flooding or other natural disasters. This coverage can typically be purchased separately, so carefully read through your policy to eliminate unpleasant surprises.
You probably received expensive wedding gifts and made major purchases with your spouse, such as furniture or appliances. In order to get coverage for your personal belongings, first go through your house and take an inventory of everything you want included in the coverage. It may be helpful to take photos or video of your possessions, record serial numbers and estimate how much items are worth. Keep your inventory list in a safe place so it can be retrieved should you need to make a claim. Note that plans will not cover certain higher value items such as jewelry; you’ll probably need to purchase a separate floater or rider to cover your engagement and/or wedding rings, for instance. Homeowners insurance can also protect your belongings when they’re not at home—if they’re stolen from your car, damaged on a trip, etc.
Be sure to note whether you’re purchasing replacement cost coverage or actual cash value coverage. Replacement coverage will fund the replacement of damaged or stolen items, while cash value coverage will only reimburse what the item is worth at the time the claim is filed, taking depreciation into account. It’s almost always better to choose replacement cost coverage.
Renters Insurance
If you’d like to protect your belongings but you don’t own a home, renters insurance can work just as well. As with homeowners insurance, you’ll want to take an inventory of your belongings in case of fire, theft or vandalism. You can add flood insurance or a floater/rider to your rental policy, too. And just like homeowners insurance, renters insurance can protect you against liability for any accidents that occur in your rental unit.
Personal Umbrella Liability Insurance
A personal umbrella policy protects your assets when your other liability coverage (from homeowners, renters or auto insurance) reaches its limit. This insurance is important for you if you have a high liability risk or a high net worth. If you’re found liable for injuring someone or damaging a person’s property, you’ll want adequate coverage, and your current policies may not be enough. Anything beyond the limits of your standard coverage could come out of your pockets. Personal umbrella liability coverage starts at $1 million and can go as high as $5 million. It’s fairly inexpensive given the amount of coverage you’ll receive, so talk with an advisor to determine the right amount for you.
Life Insurance
When you get married, you and your spouse become financially tied to each other, which makes life insurance more important for both of you. A good rule of thumb is to purchase enough coverage to provide your spouse with several years of income, plus the balance of your debts. However, it’s best to work with an advisor to determine what coverage is best for your unique circumstances, taking into account whether the surviving spouse will work, what your life expectancies are and other considerations. When selecting life insurance coverage, you have the choice between term and whole life insurance. Term life insurance is generally cheaper, but an advisor can help you decide what’s best for you and your spouse.
Disability Income Insurance
Your ability to earn income is another asset that needs protection. If you lose your ability to earn income from an injury or illness, disability income insurance can cover your lost income as well as any medical bills and other fees incurred. Keep in mind that “disability” may be defined differently depending on which policy you choose—some cover you if you’re unable to continue working at your current occupation, while others will only pay benefits if you’re unable to work at all. Work with an insurance broker to determine the proper coverage amount to purchase.
Now that you and your spouse are taking on joint responsibilities, it’s the perfect time to decide how best to protect them from risk. Re-evaluating your insurance options together is a necessity for newly married couples.
Securities and investment advisory services are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and The Summit Group of Virginia LLP are not affiliated. Additional products and services may be available through Summit Group of Virginia LLP that are not offered through AIC. Representatives of AIC do not provide legal advice. Please consult your attorney regarding your situation.
