Benefiting You

Getting married or divorced? 4 insurance changes to make

Marriage, divorce or the death of a spouse are major life events that can shake up your emotions — and your personal finances. An often-overlooked aspect of coupling or uncoupling is how it affects your insurance.

Use these tips to review and update the four different types of insurance you likely own. It’ll help you maintain a strong financial safety net through significant life changes.

1. Auto insurance

If you recently got hitched, make sure to let your auto insurer know. In most cases, being married (or having a domestic partner in some states) puts you in a different risk profile that comes with lower rates. That’s because married drivers are less likely to get into an accident than singles.

Most insurers also offer a discount for covering multiple vehicles on the same policy. If you and your spouse or partner have good driving records with no recent gaps in coverage, going from two policies to one can save money.

So, right after the honeymoon ends, review your policies. If you have different insurers, contact each of them for a new multicar quote. Also shop new providers for the same amount of coverage and compare a minimum of three auto insurance quotes before deciding.

Going from a couple to being single? Let your insurance company know. Make address and vehicle changes once you no longer live with your spouse.

Yes, taking your ex off your auto insurance means your rate may go up. But it’s better in the long run because it protects your liability if he or she gets involved in an accident or lawsuit.

2. Homeowner’s and renter’s insurance

If you and your sweetheart have separate renter’s policies, you can easily drop one before moving in together. And if you’re renting but don’t have renter’s insurance, it’s a good time to buy it. A renter’s policy is a bargain, costing an average of just $188 per year.

Like homeowner’s insurance, a renter’s policy covers your personal belongings from damage and theft, and your liability. But home insurance also covers your dwelling and outbuildings, which is why it’s more expensive. When you rent, your landlord is responsible for insuring the physical structures.

Whether you have renter’s or homeowner’s insurance, once you and your spouse or partner combine households, you’re automatically covered on the same policy. But there are still important points to review.

Do you have more to protect as a couple? You may need to bump up your liability coverage. You can increase the liability portion of your homeowner’s or renter’s insurance or purchase a separate umbrella liability policy.

An umbrella policy adds an extra layer of protection to the liability limits on your other policies, such as auto, motorcycle, home or renter’s. Getting $1 million of coverage may cost as little as $300 per year.

Depending on the value of what you both own, you may also need to increase your personal property coverage. For example, if your homeowner’s policy gives you $50,000, but your belongings total more than $100,000, you’d come up $50,000 short if your home was destroyed in a fire.

Also, be aware of coverage caps on certain possessions, such as jewelry, collectibles and electronics. If your limit on jewelry is $5,000, and you have items stolen that are worth $20,000, you’ll only receive a payout for $5,000, less your deductible. You can increase coverage limits using a rider on your homeowner’s or renter’s insurance.

Make a home inventory of all your belongings and their estimated values. If what you own exceeds your coverage, talk to your insurance company and make policy adjustments.

And if you’re splitting up, you’ll need a new homeowner’s or renter’s policy for your next place. Or if your ex vacates and you stay, be sure to remove his or her name from the policy and make any adjustments needed to your personal property and liability coverages.

Finally, no matter your situation, bundling your auto and home or renter’s coverage with the same insurer can be an easy way to save. Most carriers offer a multiline discount when you give them more insurance business.

3. Health insurance

Many group health plans offered by employers include the option to add a spouse or partner. If you both already have coverage, review the services and premiums to see if dropping one plan and doubling up on the other makes sense.

Getting married, divorced or having a death in your family are qualifying events that allow you to make changes to your health plan at any time during the year, instead of having to wait for a company’s open enrollment period.

Once a divorce is final, if you’re a dependent on a spouse’s health policy you’ll be dropped right away. You and any dependents can continue coverage through COBRA on your ex’s plan for up to 36 months. But enrolling in your employer’s health plan, if available, will most likely be more affordable.

If you don’t have health benefits through work or you’re self-employed, you can get quotes for individual health insurance through an exchange or from a carrier or insurance broker.

4. Life insurance

Life insurance is a gloomy, but important topic for couples and families. It pays one or more beneficiaries upon the death of the policyholder.

There are two main types of life insurance: term and permanent. Term life pays benefits if you die during a certain period only, such as 10 or 20 years. Permanent life covers you for your entire life.

If your death would cause a financial hardship for your spouse, partner, dependents or any loved ones, you should have life insurance to protect them. The payout can be used for any purpose, such as paying for living expenses, debt, education or funeral costs.

If you already have life insurance when you get married, review the beneficiaries to make sure payment would go to those you want. Also, consider if you should increase your life coverage or purchase an additional policy.

Likewise, when divorcing, make sure to change unwanted beneficiaries. If you have minor children, consider who would take care of them after your death. If your ex-spouse would be the primary caretaker, it may be wise to keep him or her as the beneficiary to help protect the welfare of your children.

If you have questions about these or other types of insurance, speak with a licensed agent. A broker or company representative can review your situation to make sure you have enough of the right types of insurance to protect you and your family.

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