Insurance and marriage
Tuesday, 13 February 2018
“Marriage is the perfect time to sit down and take a look at insurance coverage," says Analicia Geisen, Executive Vice President and Director of Insurance at BBVA Insurance Agency.
“The value of sufficient insurance coverage can sometimes be difficult for a single person to see, but married people realize they have more responsibility, more obligations, and more to protect."
Another reason to review coverage soon after tying the knot is because insurance companies may offer married people better rates than single customers. Thus, combining and updating existing insurance policies could result in some extra savings.
Although many young couples might not consider it a priority, purchasing life insurance to protect the surviving spouse in the event one passes away is an important part of good financial planning, according to Geisen.
But how much life insurance do you need? This is not an easy question to answer, but an insurance advisor will be able to help analyze finances and future needs to come up with a number.
Keep in mind that the primary goal of life insurance is to pay off debt and provide income for the surviving spouse for 20 years or longer. More coverage will be required if children are in the picture.
Start by determining how much would be needed to pay off any outstanding debt, like a mortgage. Then, estimate how much monthly income the surviving spouse will require. From there, calculate how much principal will be needed to generate the necessary income earning a fairly conservative rate of return.
For example, a salary of $60,000 a year produces roughly $5,000 per month before taxes. To generate $5,000 a month in interest income, $1 million in principal earning 6 percent would be required.
While $1 million sounds like a large number, young, healthy adults may be able to get term life policies with high death benefits at relatively affordable rates. And term insurance is probably the worth considering when a couple is starting out.
If there are life insurance policies that were purchased before a couple marries, there could be some financial benefit to combining and updating the policies. Updating an existing policy could also include changing the beneficiary. For example, if an existing policy has a family member as the beneficiary, this will probably need to be changed to insured's new spouse.
If both spouses have group medical coverage through their employers, Geisen suggests that couples compare policies to determine if one offers the best rates and coverage. The analysis may show that you need to drop one policy and add a spouse to the other, or keep secondary insurance for additional coverage. Some employers have human resource representatives who can help employees compare policies and make decisions regarding coverage.
Home and car insurance
According to the DMV, married people are less likely to get into auto accidents than single people. As a result, many insurance companies offer married couples lower car insurance rates. In addition, some insurers offer multi-car discounts, and many married couples can take advantage of this savings as In most cases, Geisen says, it makes sense for married couples to consolidate auto insurance policies. Re-evaluating property insurance coverage after marriage is advisable as well. “You have fewer assets when you are single," Geisen points out. “Once you are married, your income increases, your assets increase, and you need to make sure you have coverage to protect these increased assets." In addition to homeowners insurance, it's important to make sure all personal property is covered. Also, some insurers offer discounts when a customer purchases both home and auto insurance, providing another opportunity for a newly married couple to save money.
Insurance Products offered through BBVA Insurance Agency, Inc. Insurance Products: [boxed disclosure] Are not Deposits, Have no bank guaranty, Are not FDIC Insured, Are not insured by any other government agency, May Lose Value.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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