That big day
has finally arrived. You are marrying the love of your life and ready to
pronounce those vows: to have and to hold each other in sickness and in health
til death do us part.
Yet, how many couples
think about having enough insurance while planning their wedding and including
the right kind and the right amount of insurance that will help protect their
finances from lawsuits and accidents?
Following are some steps to take as a married couple:
If you and your spouse
count on each other’s earnings to support your standard of living, you both
need life insurance that will keep the other financially afloat if something
happens. A life insurance payment can pay for funeral costs, rent or mortgage,
household bills, and debts. It can also help pay for childcare and college for
children and can leave a legacy for those you love.
Your employer might offer
supplemental life insurance as an employee benefit. However, the amount of
coverage you get through a group insurance plan might not be enough. In
addition, you may not keep that coverage if you leave the job. That is why you
should get an individual life insurance policy.
There are two main types
of life insurance: term and permanent. Term life insurance lasts for a certain
number of years, such as 10, 15, 20, or 30. Permanent life insurance lasts for a
lifetime and, therefore, is more expensive than term life.
A term life insurance
policy can be ideal for a young couple because it is affordable, says Sharif
Muhammad, a licensed insurance agent, Certified Financial Planner, and owner of
Unlimited Financial Services. The policy’s term should be long enough to cover
the needs of children—such as the years until they graduate college. Search for
a policy that offers the option to convert to permanent coverage “so you have
the option if you want to maintain the policy after the term runs its course,”
states Muhammad.
You can shop for life
insurance policies online, including options for getting instant life
insurance. However, consider working with an independent insurance agent who
can help you determine how much coverage you need and will shop around for you
to find the best policy for your needs.
How to Save on Life Insurance
Life insurance is a lot
cheaper than you think. A survey by LIMRA and Life Happens found that half of
the respondents thought a $250,000 term life policy for a healthy 30-year-old
would cost $500 or more a year. However, the average cost of such a policy is
only about $160 a year, or about $13 a month. Your age, health, policy type,
and amount of coverage you want will affect the price you pay for life
insurance.
“The younger and
healthier you are when you get coverage, the more affordable it is,” says Amy
Shepard, a Certified Financial Planner with Sensible Money. She suggests it can
be worth it to pay a little more for a policy with a bigger benefit now in
order to ensure the payout will be enough to cover any future expenses you
might have, such as a house with a mortgage or children. You could also buy
more life insurance in the future, but you will pay rates based on your older
age and any health problems that develop in the interim.
Why You Need Disability Insurance
According to the Social
Security Administration, over one in four of today’s 20-year-olds will become
disabled before reaching age 67. If you become part of that statistic and
cannot work because of a disability, you and your spouse would likely feel the
financial pinch from the loss of your income.
Workers’ compensation
insurance will pay only if the injury or illness is work-related. It may be
challenging to qualify for Social Security disability benefits, and the average
payout is just $1,236 a month. That is why it is important to have disability
insurance to fill the gap. Think of it as a protection for your paycheck
because it will replace a percentage of your income if an illness or injury
leaves you unable to work, temporarily or permanently. You can use disability
insurance to replace income during maternity leave, Shepard says.
How to Get Disability Insurance
If employed, you can get
disability coverage through a group plan at work. A survey by the Society for
Human Resource Management found that 71% of employers offer long-term
disability insurance and 61% offer short-term disability insurance. Typically,
group disability coverage will replace up to 60% of income, Shepard says. The
drawback to relying on group coverage is that you cannot keep it if you leave
your job. “I think it’s always a great idea to take advantage of group coverage
if you have it and supplement it with a private policy,” Shepard says. That
way, you will still have coverage regardless of your employment situation.
If you already have group
disability insurance, the amount of individual coverage you can get is limited.
Shepard recommends working with an independent insurance agent to coordinate
individual coverage with any group coverage.
How to Save Money on Disability Insurance
Getting disability
insurance through a group plan at work is usually the most affordable option
and the easiest. If your employer has a group disability insurance plan offered
to all employees at no cost, you will automatically qualify for coverage
without having to answer questions about your health or having to take any
medical tests, according to Life Happens.
Individual disability
insurance can be more expensive because your age and health can affect the
cost. You can save money by getting disability insurance while you are young
and healthy, Muhammad says.
You also can keep down
the cost of disability insurance by opting for long-term coverage rather than
short-term coverage, Shepard says. It is more important to have a policy that
will protect you for a significant period, and you can rely on an emergency
fund (if you have one) to replace your income if you have a short-term
disability.
See if any professional
organizations you might belong to offer a group policy for long-term disability
insurance. As long as you maintain your membership, group coverage will
probably be more affordable than individual coverage.
Health Insurance - Coordinate Coverage with Your Spouse
You can typically change
your health insurance plan through work (for group coverage) or through the
health insurance marketplace (for individual coverage) once a year during open
enrollment. However, marriage is one of the life events that allow you to
change your coverage outside of open enrollment.
If you or your spouse
does not already have health insurance, you may get coverage now through one or
the other’s plan. If you both have coverage, it’s a good time to review your
plans to see if you should maintain separate policies or get joint coverage,
says DeDe Jones, a Certified Financial Planner and managing director of
Innovative Financial.
You might find that, for
example, you can get better, more affordable coverage by switching to your
spouse’s health insurance plan.
How to Save on Health Insurance
A common way to lower the
cost of health insurance is to opt for a plan with a high deductible. Premiums
on high-deductible plans are lower because you have to pay more out of pocket
until coverage kicks in. This type of plan can make sense for healthy, young
adults who do not take many or any prescription drugs and do not require
frequent trips to the doctor. However, you should not bet on your good health
to help you avoid paying for the deductible. If your employer offers a health
savings account along with a high-deductible health plan, set aside money in
that account to cover your deductible and other out-of-pocket medical costs.
If you cannot afford to
max out your health savings account or cover the cost of your deductible, a
high-deductible plan might not be the best way for you to save money on health
insurance, Muhammad says.
Alert Your Auto Insurer to Your New Status
Let your auto insurance
agent know that you have gotten married. Other household members are required
to be on your policy if they are licensed drivers, even if they do not drive
your car regularly.
If you and your spouse
each have a car and coverage through separate insurers, it usually makes sense
to choose one company and buy one policy. You will get a discount for insuring
more than one vehicle, plus additional savings if you also buy your homeowner’s
or renter’s insurance from that company.
How to Save on Auto Insurance
Even if your insurer
offers a discount for insuring two vehicles, it can pay to shop around for
lower rates with other insurers. Muhammad says that he and his wife reshop
their insurance every two years to ensure they get the best deal. If
you are happy with your current insurer, ask about other auto insurance
discounts that you might qualify for. For example, you might save money by
paying your bill annually rather than monthly.
To soften the blow of
making a lump-sum car insurance payment, Shepard recommends setting aside money
each month in a savings account to have enough to pay the bill when it’s due.
Also, ask about increasing your deductible to lower your premium.
Homeowners' or Renters' Insurance
Make sure you have enough
coverage. Now that you are married, you might have more belongings in your
household. So make sure you have enough homeowners or renters coverage to
replace those belongings in case of a major disaster like a fire, tornado, or
hurricane.
To figure out how much
coverage you need, start by doing a home inventory. Go room to room and make a
list of your belongings and, if possible, their estimated cost. An easy way to
do an inventory is to take photos or videos of your entire home, including the
inside of closets, drawers, and storage spaces. There are also home inventory
mobile apps such as MyStuff and Nest Egg.
If you have an “actual
cash value” policy, the payout you would get would cover the cost of your
belongings minus depreciation of their current value. It is better to get a
policy with replacement cost coverage. This will cost more, but it will cover replacing your items.
If you have expensive
items such as wedding rings, artwork, or collectibles, you might need to add a
floater or rider to your policy to provide additional coverage for those items.
Call your insurance agent to discuss your coverage needs now that you are
married.
How to Save on Homeowners Insurance
Shop around to find the
best homeowners insurance by getting quotes from at least three insurers, or
work with an independent agent who can do the shopping for you.
Ask about multi-policy
discounts. You can save money if you have more than one type of policy, such as
a homeowner and auto insurance, with an insurer. You can lower your premium by
raising your deductible. Adding safety features such as an alarm system and
smoke alarms can lead to discounts.
Keep in mind as you look
for ways to save money on all of your insurance policies that it is important
not to skimp on coverage just to save money.
“Shorting yourself on
insurance is a fool’s endeavor,” Jones says. Paying for good insurance can seem
unnecessary if you never make a claim. However, insurance is for the disasters
in life, so you do not have to gut your savings or lose your home or vehicle
without a financial safety net.
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