When friends and family find out you and your partner have gotten engaged, you’ll likely hear lots of congratulations, along with plenty of marital advice about sharing everything. What you may not hear is anything about insurance or combining finances. Insurance and shared finances likely aren’t the first things on your mind as you’re registering for gifts, planning a wedding and going on your honeymoon.
However, insurance and finances are essential topics to consider when you and your beloved tie the knot. Will you be combining your assets or keeping them separate? Should you add your spouse to your insurance policies or purchase new policies? We have compiled this guide to navigating a changing financial and insurance situation with your spouse and family.
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Getting married affects your life in many ways. It’s the start of a new chapter and should be exciting. It can also involve a good deal of adjustment as you learn how to become partners in the practical parts of life as well as the fun, romantic ones. One of the biggest things to consider is balancing marriage and finances.
There is no one-size-fits-all answer to how marriage affects your finances since it depends on how your and your spouse’s finances look before marriage and the financial decisions you plan to make together. No matter what, though, there will always be some adjusting involved when joining your and your spouse’s finances.
This adjustment can be tricky to navigate, but once you figure it out, you can enjoy some financial benefits to marriage. In a Pew Research study, 28% of people cited financial stability as a very important reason to get married. If you want financial stability to be a part of your marital bliss, then you should start early discussing your finances.
Money and marriage are closely related, and there’s a lot to tackle after the wedding regarding your and your spouse’s finances. If you got married recently, now is the time to check off the items on the post-wedding financial checklist below.
Regardless of whether you have children or assets, you may want to write a will. If you already have a will, you may want to revise it. Wills are one aspect of marriage and money you may want to keep separate. Depending on where you live, your assets and property may not revert to your spouse automatically when you die. Further, if you don’t have a will, your estate may go through probate, which is an expensive and time-consuming process.
If you and your spouse have children, you may want to name a guardian for them in your wills if you both pass away simultaneously. After you have written a will, revisit or update it after significant life changes like a marriage, birth or divorce, or once every decade if no major life changes have occurred.
Combining financial assets with a spouse is another common step most newlyweds have on their financial checklist. If you and your spouse currently have separate financial assets, you may want to discuss the advantages and disadvantages of combining them versus keeping them separate.
For many married couples, combining assets will make it simpler to manage and access these assets. Other couples, however, may choose to keep some or all accounts separate, especially if one spouse has credit, tax or legal problems. You may choose to keep some accounts separate, but open a joint bank account from which you can pay your joint expenses like your mortgage, groceries and utilities.
When you write or revise your will, you may also want to create a power of attorney and medical directive. If you give your spouse power of attorney, they can make decisions on your behalf if you become incapacitated due to a disease or injury and cannot speak for yourself.
Additionally, a medical directive is essentially a power of attorney, but specifically for health care. A medical directive sets your preferences in specific medical situations and names your appointed person to make choices about your medical care. As with a will, you may want to update these documents after major life changes or once every decade.
Since retirement accounts are individual holdings, you and your spouse should discuss maximizing retirement savings. If you both work, you can contribute the maximum possible amounts to a 401(k) or IRA. If one spouse doesn’t work, the working spouse can open a spousal IRA. With a spousal IRA, the working spouse funds the account, but the funds and account belong to the other partner. Higher-earning spouses can also contribute to their lower-earning spouse’s traditional IRA.
If you’re both able to contribute to your retirement accounts, you’ll be setting yourselves up for a comfortable future retirement. Be sure to also discuss your goals and expectations for retirement, as this can help you plan for retirement contributions. For example, do you see yourself traveling during retirement or laying low near family?
While combining health insurance after marriage isn’t required, doing so may be the most beneficial option. If both you and your spouse have health insurance through work, you may want to compare plans and determine which one of you has the better coverage, along with how much it may cost to add your spouse to your health insurance plan.
For example, if you plan to start a family in the next few years, you may also want a health insurance plan that includes good maternity coverage. Many health insurance providers lack maternity benefits, so if one of you has this coverage and the other doesn’t, you may want to choose the plan that does. If your employers’ insurance lacks the necessary coverage you and your spouse need or isn’t cost-effective, you may consider switching to a completely new provider.
If you or your spouse didn’t already have life insurance before getting married, now may be an ideal time to purchase policies. While you anticipate sharing your entire lives together, unexpected and tragic events could leave you or your partner without the other. Starting your life insurance policy after marriage helps ensure your spouse will be financially cared for in your absence.
The younger you are when you buy life insurance, the less expensive it will be, as you lock in rates when you get your policy. Term life insurance tends to be the cheaper option over whole life insurance, but whole life insurance can be the better option depending on your financial situation and age.
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Next, you will want to review your auto insurance policies and purchase a single policy for both you and your spouse. Once you’re married and living together, you and your spouse will likely drive each other’s vehicles. This means you or your spouse may want to add the other to their policy as a permitted driver. As long as you and your spouse have good driving records, you may not see an increase in your insurance rate.
You may want to determine which one of you has the more affordable provider or plan and what it would cost to add a spouse under an umbrella plan. An umbrella plan is usually less expensive than paying for two separate auto insurance policies, so you may want to consider this option if it saves you money.
If your spouse has a poor driving record or a teenage driver on their policy, you may see your insurance rate go up. If you add a teen to your policy, you may want to restrict their driving privileges to your least valuable vehicle.
After getting married, you and your spouse will likely either move into one of your places together or purchase a home to start your new life. The most important thing is to ensure both of your belongings will be adequately covered under the same policy.
If you have existing home insurance, speak with your insurance agent about adding your spouse to your policy and potentially upgrading your coverage if necessary. If you are moving, make sure to switch your coverage to your new home. If you don’t have home insurance, now is the time to purchase a policy.
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Even if you believe life insurance isn’t currently necessary for you and your spouse, the odds of you or your spouse becoming seriously disabled are much higher than death. This means you may want to obtain disability insurance.
The disabled spouse would not be able to generate income, yet their medical costs could be incredibly expensive. Supporting a disabled spouse on a single income can be a significant financial burden. Disability insurance can help alleviate some of that financial stress if you or your spouse becomes disabled. If you and your spouse don’t have disability coverage from your employers, you may want to purchase disability insurance yourself.
You’ll also need to revisit the topic of taxes when you get married. When it comes time to file for the year in which you got married, you’ll need to determine whether it makes more sense to file jointly or separately. Depending on your situation, filing one way may be more financially beneficial than the other.
For most couples, filing jointly is financially beneficial, but this isn’t always the case. For example, you may file separately to keep your taxes separate from your spouse’s business or if one spouse has medical deductions and earns less than the other. Consider your situation and talk to a tax professional for advice.
If you and your spouse are combining property, such as homes or cars, and you want to add your spouse to your property title, follow the requirements set by your state to do so. While there may be a fee to add your spouse to the property title, it is generally very affordable.
Adding your spouse to your property titles is important because many states follow common property laws, which means assets and property belong to the person whose name is on the title. Titles can affect who gets the property after your death, which means if your spouse’s name isn’t on the title, the property could be given to someone else.
Reviewing your finances and credit reports is an essential step in setting you and your spouse up for marital harmony and financial success. You can request free credit reports, and you may be able to monitor your score through websites like Credit Karma or your credit card provider.
If you notice any issues when reviewing your credit report, dispute any incorrect information. Then make goals for improving your score if necessary. Managing your credit together is essential, as it has a big impact on your ability to get loans and good rates. For example, if you’re buying your first house together, you’ll need to take out a loan with decent credit, otherwise, your interest rates or mortgage payments could be higher than you can afford.
If you or your spouse plan to change your last name or both of your last names, you may need a copy of the marriage certificate. To obtain a new Social Security card, take the marriage certificate to the local Social Security office.
You can request a name change and get a new driver’s license when you have a new Social Security card. Request the name change on credit cards, bank accounts and your other accounts.
You and your spouse may enter your marriage with debt, such as credit card debt, student loans, car loans or mortgages. If one or both of you has debt, create a plan to pay it off. Discussing debt as soon as possible allows you to form a plan and ensure the topic is less painful in the future. Finances and marriage are closely entwined, so you want to ensure you and your spouse are on the same page.
In your debt payoff plan, include strategies for reducing expenses and increasing your income, both of which can help you put more money toward your debt payoff. As a couple, you can set goals for how much you want to pay off in a certain timeframe. Additionally, you may want to look into debt consolidation options.
For example, you may want to pay off your highest-interest debts first. If you have a high-interest credit card, your first goal may be to pay off the balance in four months. Then your next debt payoff goal may be paying off your student loans in three years.
Creating a budget is crucial to set you and your spouse up for financial success in your marriage. You can use a spending tracker to manage how much you’re spending versus how much you’re earning. You may want to do this for a few months to help you set a realistic budget.
A tracking tool can show you where you’re spending too much money, so you can find places to cut back. You can also determine how much you spend monthly on needs versus wants, then create a realistic budget for your current lifestyle, helping you create the life you want in the future.
Spending can cause friction in a marriage, so it’s important to have an open, honest discussion about avoiding debt and when credit cards should and shouldn’t be used.
You or your spouse may be better positioned to manage credit card accounts. In this case, you may want to consider adding your spouse as an authorized user on your accounts so they can manage the accounts and make payments. If you or your spouse have credit card debt, revisit the subject periodically to avoid unexpected credit card bills.
Depending on what stage you’re at in your career, you may not be entirely sure about your ideal career path. Or you may be unhappy in your current career and are already looking to make a major career shift. Discuss with your spouse what your current and future goals are for your career, particularly because these goals could require you or your spouse to compromise.
A career change could also put you in a different financial situation than you are now, potentially requiring your spouse to pick up more or less financial burdens. Discussing these possibilities with your spouse is important for setting expectations.
While you are discussing your career and financial goals, you may want to discuss your life goals as well. What are you looking for in life? What would you like to accomplish on your own and with your spouse? What can you do to achieve these goals? What can your spouse do to help you reach these goals? These goals may include family, lifestyle and more, impacting your finances.
Talking to your spouse about the life goals you both have can ensure you’re on the same page and can offer each other the support needed to help you reach your goals.
Remember to check in with your spouse regularly about your goals, whether your goals are for saving, debt payoff, building credit, reaching career goals or achieving life goals. Agree on times to revisit your goals. For a short-term goal, you may want to check in once a week. For longer-term goals, you may want to check in once a month, every few months or annually.
Goal check-ins allow you to determine if you and your spouse adequately support each others’ goals and how you can continue working toward them. This is also a good time to address any potential changes that may affect your ability to reach your goals individually or as a couple.
Finally, ensure you update all your accounts after you’re married. If you move, update your change of address with every company that bills you regularly. Add your spouse to any leases you have and to emergency contact listings. Update the beneficiary declarations on your insurance policies and retirement plan to include your spouse, along with updating your safety deposit box and bank account agreements.
It’s always smart to sit down with your partner before or just after getting married to go over your newlywed finances. Below is a step-by-step guide to combining finances after a wedding.
The first step of financial planning after getting married is getting organized, so you know how much you and your spouse have and where the assets lie. Both you and your spouse should make three lists:
Take stock of all your assets and debts, so you can determine your net worth. Besides retirement accounts, investments you may own include:
You and your spouse should discuss your current approaches to investing and your investment goals. Ask your financial institutions if they offer a joint account option and how to add your spouse’s name to your account. Alternatively, you may be able to make your spouse a beneficiary. If you both have multiple investment accounts, you may want to speak with a financial adviser about how to best move forward.
Once you determine how much you and your spouse have and how much both of you owe, the next step in the process is deciding what finances you will be combining and what you will be keeping separate. Consider these options:
Next, open joint savings and checking accounts. Many couples first take this step when they’re ready to deposit gift money from their wedding. However, you may want to start financial planning when engaged or living together to begin practicing money management.
Perhaps the most common practice for married couples is opening two joint accounts — a checking account and a savings account. Both you and your spouse will transfer money into these joint accounts from your individual accounts. Follow these tips for opening joint accounts:
Finally, when you combine your finances after getting married, it’s essential to communicate openly and honestly with your partner. Work together to create a budget that leaves room for contributing to monthly savings, and discuss your long-term financial goals so you can work toward them. Set up regular check-ins to sit together and review your finances. These sessions can be monthly, biweekly or weekly.
In addition to joining your finances, you’ll also want to talk to your spouse about joining insurance policies. Some insurance policies are affected more than others depending on your situation. We will discuss in detail how getting married affects three types of insurance — home, auto and life.
If home is where the heart is, then it’s the perfect place for you and your spouse to enjoy married life together. Whether you already own a home or are purchasing your first home together as a couple, there are some important things you should know regarding home insurance.
If you and your spouse are both homeowners when you tie the knot, then one of you is likely planning to sell your home so you can move in together. Sharing one mortgage payment and one home insurance premium together will save you both money.
When you are selling your home, make sure you maintain your home insurance coverage until you have officially closed on the sale of the property. Let your insurance company know at least a month before the closing date, so they can prepare to issue you a refund for any payments you have made that go beyond the day you close.
When you move into your spouse’s home or your spouse moves into your home, you’ll want to make sure you are both listed on the insurance policy. You’ll also need to determine whether the level of coverage you or your spouse currently has for personal possessions is still enough when you add in new possessions. For example, adding your spouse’s electronics to the household may merit a higher degree of coverage. The good news is that your new marital status may lead to a lower premium rate.
If you’re purchasing your first home together, then you’ll want to begin looking into purchasing a homeowners insurance policy early on in the process. This is because most mortgage lenders will require you to have a policy in place before you can close on the home. In many cases, you’ll be expected to pay the coming year’s premium upfront so it can be put into escrow.
If you already have another type of insurance policy, such as car insurance, from a carrier you trust, you may want to consider bundling your homeowners policy with this existing policy. Bundling policies can help you save money. It’s always a good idea to do your research, though, and look into other possible insurance providers, especially if you’re not extremely satisfied with your current provider.
There is a lot to consider when you’re buying your first home. Take some time to learn about insurance and other important aspects of buying a home so you and your spouse are financially prepared and understand how to navigate this unfamiliar process.
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While it’s less likely that both you and your spouse own a home when you get married, you both likely own a car. There are well over 5 million registered vehicles in Missouri alone. If only one of you owns a car, then the only change you have to make with your auto insurance is to contact your insurance company and have your spouse added as an approved driver to your policy.
If both you and your spouse owned your own vehicles before getting married, then you should both already have at least the minimum required level of auto insurance for your state. Except for New Hampshire, every other state mandates that drivers have a specific amount of liability insurance, which covers the costs of damages to the other driver, passengers and vehicle when you get into a wreck for which you were at fault.
If you and your spouse have separate auto insurance policies, you’ll want to decide together whether to terminate one of your policies in favor of the other or to seek out a new policy together. You can enjoy some great benefits when you share an auto insurance policy with your spouse:
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Your car insurance policy automatically covers household members, but you’ll still want to contact your insurer to officially add your spouse. Be sure your spouse has coverage under your policy before they cancel their own policy so there is no period of time where either of you is without insurance coverage.
Life insurance is a wise choice for couples who want to leave their spouse in a financially comfortable position rather than a dire one. Single people with no dependents don’t often need life insurance, but when you have a spouse who depends on your income, you have to consider their future in the event of your untimely death.
If you don’t already have a life insurance policy, getting married provides a good opportunity to consider purchasing one. Life insurance is a financially responsible safeguard to have in place if the untimely death of either you or your spouse would leave the other in a difficult spot financially.
Consider the various bills you pay together as a couple, especially larger expenses like your mortgage payment. Would you be able to shoulder this financial burden alone if your spouse were suddenly not there to help? Would your spouse be able to cover these costs without your help? Would you or your spouse be able to afford to take time off to grieve in peace before returning to work?
An untimely death would also mean having the unexpected financial burden of final expenses. The cost of a viewing, funeral and burial, including a vault, costs an average of $9,420 according to the National Funeral Directors Association.
The primary purpose of all life insurance is to give your dependents a sum of money, known as a death benefit, that will help them cover costs in your absence. There are three main types of life insurance policies you can purchase:
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If you already have a life insurance policy in place when you get married, you’ll want to revisit your terms to make sure you have the correct beneficiaries listed. For example, if you previously had a family member or an ex listed as your beneficiary, you’ll want to make a change so your spouse is listed.
You can list multiple beneficiaries on your policy, keeping other dependents such as children or parents listed as beneficiaries in addition to your spouse. Just be sure to specify the percentage of your death benefit you would like each person to receive if you were to pass away. Having your affairs in order, even as a young person, is one of the best ways you can continue to show care for the people you love, even in your absence.
We’ve covered the basics of insurance in the context of marriage, but there are some more specific questions we often hear at David Pope Insurance Services, LLC. We’re going to take a moment to answer each of these questions.
The answer to this question depends on the type of insurance. Marital status typically lowers your insurance premiums for home and auto policies. For home insurance, you may pay less after getting married since married people are less likely to file claims, statistically speaking. The amount of savings will depend on your particular policy.
Regarding auto insurance, there is some statistical data to show how much you could save by being married. Missourians often save on their car insurance just by being married. If you’re in your 20s, you can save a higher percentage, more in the realm of 20 to 26% less.
Life insurance premiums typically don’t go down after marriage since these rates are primarily based on factors like gender, age and medical history.
There is no set amount of time you have to contact your insurance company to add your spouse to your car insurance policy or to add them as a beneficiary to your life insurance policy. The sooner the better, so you don’t have to worry about the consequences if something happens in the meantime.
Younger couples who are used to being covered by their parents’ insurance are often concerned about how getting married will affect their coverage.
You can be on your parents’ auto insurance while you live at home, but as soon as you move out, you’ll need to get your own policy. When you get married, you can’t stay on your parents’ auto insurance anymore, so if you don’t already live on your own and have your own car insurance policy, you should go ahead and get one before you get married.
Marital status doesn’t affect your eligibility for car insurance, but it can affect your rates. Being married makes you statistically less likely to file a claim, and your insurance company should recognize this statistical fact by rewarding you with lower premiums.
As we discussed in the auto insurance section of this post, however, your car insurance rates can also be negatively affected if you add your spouse to your policy, and your insurance company sees them as a high-risk driver. If you’re worried about this scenario, you may want to keep separate policies and specify to your insurer that your spouse will not drive your car.
The short answer to this question is yes. While everyone’s personal finances are different and no two married couples are exactly alike, as a general rule, being married can save you a lot of money over the long term.
When both you and your spouse work, you can share bills that will likely be only slightly higher than bills you would otherwise have to pay on your own. There are many other financial benefits to marriage, such as being able to file joint taxes. As we’ve already seen, marriage can save you money on your insurance premiums.
While it is generally cheaper to be married, you should consider your own personal situation if you’re trying to decide whether turning your romantic partnership into a legal marriage is a good financial move.
For most couples, it tends to be more cost effective to have one car insurance policy. With a single policy, you may be eligible for more discounts like a multi-vehicle discount and better rates. Most insurance companies will not allow married couples to have separate auto policies.
If you’re married, you may be able to get a lower rate for your car insurance. As such, there is no incentive to be dishonest with your auto insurance policy by saying you’re single when you’re legally married. If you lie to your insurance company, you may face claim denial, premium increases or policy cancellation. Fraud also has legal consequences, which means you could face significant fines, probation, community service or jail time.
If you are still engaged and not yet married, you may want to combine some of your insurance policies, especially if you’re living together. Whether you can do so varies from insurer to insurer, as insurance companies do not necessarily abide by one consistent standard when it comes to handling insurance for unmarried partners. Property ownership is one factor insurers consider when determining which couples qualify for joint or separate policies.
No, you don’t necessarily have to be married to share insurance. However, whether you can or should share insurance depends on your specific circumstances.
Newlyweds may want to consider buying life insurance as soon as possible after the wedding. As soon as you and your spouse combine your households, your expenses increase, especially if you are growing your family. If a spouse passes away, life insurance can replace the lost income and cover funeral expenses.
Life insurance policy rates increase as you grow older. As people age, medical conditions become more prevalent, which can lead to larger premiums. That means the sooner you can buy life insurance, the better.
If you get married and have been on your parents’ car insurance, you will not be able to stay on their policy anymore. Even if you and your partner continue to live with your parents following your marriage, the insurer will likely require that you purchase a separate auto insurance policy with your spouse.
However, your policy should list all the licensed members in your household as drivers. If you have access to your parents’ cars, their auto insurance should also list you as a driver. A good rule of thumb is that you may want to purchase a separate policy when you get married, move out or register a vehicle in your name.
Your new spouse isn’t the only person you should have a great relationship with. You should also make sure you partner with an insurance company that will give you the time and attention you deserve. David Pope Insurance, LLC is an independent, family-owned insurance agency serving Missouri, Arkansas, Iowa and Kansas. We have the experience to help each of our clients find the perfect policies for their unique needs.
David Pope can help you get the right home, auto and life insurance for you and your spouse so you can enjoy wedded bliss, knowing you’re well-prepared for anything life throws at you. Request a quote from David Pope today.