Getting married is a celebratory occasion on the road to what everyone hopes will be happily ever after. But matrimony is about more than romance; it’s also an occasion in which two people enter into a binding contract with one another, combining their legal and financial affairs. So along with the happy nuptials, it’s also time to start talking about the essential but not-so-happy topic of insurance.
Couples of all ages need to take steps to protect their financial future, but marrying later in life often brings more complexity and a greater sense of gravity to the table. Chances are, each party is coming into the marriage with more assets and perhaps more debt than younger couples. Moreover — although it’s something nobody wants to think about — the probability of major illness, disability, or death is more likely and looms closer every day.
It has become far more common for people to marry later in life these days. According to the U.S. Census, the average age of first marriages has risen by more than six years in the past 50, with more people than ever before waiting until age 40 to tie the knot. Not only that but second marriages later in life are on the rise. (1, 2)
So what do you need to know about insurance when you marry later in life?
Why Newlyweds Need Insurance
When you’re single, you may have insurance coverage sufficient to protect yourself and your children financially, close out your affairs, and cover your final expenses. But after marrying, it’s important to protect both parties and your dependents in the event of disability or untimely death. Losing an income, caregiver, or homemaker can be difficult for most households, if not financially disastrous.
When two people with established adult responsibilities come together, you’ll need to sort out what you keep and what goes. Maybe one spouse’s premarital home is sold or rented out. Maybe you’ll buy a new home together. Whatever the situation, if one spouse passes away — even if it’s before the ink dries on the marriage license — the surviving spouse will have to find a way to handle all of the financial obligations left behind.
If you still plan to start a family or you will be blending a family of dependent children, it’s up to you to do everything in your power to ensure those children will be taken care of. If your children are older, you’ll need to sort out who will be the beneficiaries and what’s best for the family as a whole.
All things considered, the newlywed phase is the best time to start the process. Not only are you both financially liable from day one, but this is a time when you’re most excited about planning your future together. If you don’t do it now, you may put it off until it’s too late.
Questions to Ask Yourself
At a more mature stage in your life, you’re likely to have more on the line than you did as a young adult. So you’ll need to ask yourself pragmatic questions about your financial responsibilities, such as:
Is there an outstanding mortgage that needs to be covered?
Do we have sufficient savings to cover the cost of our children’s education?
Are there business affairs, investments, or real estate holdings that need to be handled?
Do we have special-needs children, parents, or close family members who will need ongoing care or support?
As you’re more advanced in age, you’ll also want to face realities about health-related concerns, such as:
Do we have chronic conditions or poor health habits?
Does dementia or a severe illness run in the family?
Will we be able to care for each other as we age or will we need assistance?
How will insurance policies impact Medicaid eligibility?
Asking the tough questions now may not be fun, but it will help you prepare for the future and save you from preventable hardship down the line.
Important Considerations
When shopping for insurance, factors that influence the cost and accessibility change with age and health status, as well as the amount and type of coverage you will need.
For example, life insurance comes with a mortality and expense risk charge, which is a fee that is meant to protect the insurance company against the untimely death of the policyholder and averages about 1.25% per year. This charge is based on assumptions related to your life expectancy and the likelihood of adverse events that would lead to a payout.
The older you are, the higher your mortality and expense risk will be. When you purchase insurance as a couple marrying later in life, it will cost you more.
As you are determining what kind of coverage best suits your new circumstances, in some cases, it could make sense for you to surrender (i.e., cancel) a universal or whole life insurance policy you had going into the marriage.
But before surrendering a policy, always be sure to have another policy lined up. Also keep in mind that if you choose to surrender a policy prematurely, you may have to pay surrender charges and face income tax implications as a result. If you are considering this strategy, your accountant or financial advisor can guide you through the process.
Are You Prepared for Extended Care?
These days people are living longer than ever, with the average life expectancy of today’s seniors reaching into the 80s and beyond. With advances in medicine, it’s not entirely unlikely that many of us will live to be centenarians. Ideally, you and your spouse will have long, healthy lives in which you are able to take care of yourselves until the end. But the likelihood that one or both of you will need some form of assisted living care is high.
To ensure you are able to get the care you need and maintain your living expenses, you and your spouse may want to consider purchasing a long-term care insurance plan. But know that unless you’re in your twenties or thirties, these policies can be costly. Other potentially helpful options could be to have one spouse own a policy or work with a professional to create a life insurance trust for the benefit of one spouse.
Insuring Your Future Together
No matter your age, getting married is a life event that should motivate you to get your affairs in order. Life insurance, disability coverage, and other types of policies add a helpful layer of protection for your spouse if needed, but keep in mind that every policy comes with important factors to consider and strings attached.
When you are shopping for insurance policies as a newly married couple, remember that you’re not locked into the same coverage forever; you can always review and adjust as your circumstances change. However, when you are married later in life, insurance is more expensive, your options may be more limited, and there is probably more at stake. Taking the time to consider your changing insurance needs, investigate the available options, and secure adequate coverages can give you peace of mind as you look forward to the future with your new spouse.
John J. Diak, CFP® is the Principal & Client Wealth Manager at Oatley & Diak, LLC in Parker, Colorado. He assists clients through many difficult lifestyle changes such as business downturns, retirement planning, divorce, the death of a spouse, and family estate issues among others. Oatley & Diak, LLC is a family-run registered investment advisory (RIA) firm that provides clients with investment management and financial planning services in a hands-on, intimate environment. Learn more about them at oatleydiak.com.
This material contains only general descriptions and is not intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. Guarantees are based on the claims-paying ability of the issuing company.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.
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