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There are many articles about life insurance in general, but very few insights about what exactly you need to consider during the most important moments of your life. Today we show you what happens to your life and health insurance after you say “I do”.
When it comes to insurance, tying the knot gives rise to savings opportunities as well as several things you need to consider. We asked licensed, experienced life insurance broker Tamara Humphries for her opinion and tips.
1. Coverage size: Once you get married, and especially if you have or will be having children, you should consider increasing in your life insurance coverage.
A very interesting study from MoneySense found that on average, you need $243,660 to raise a typical child to age 18. This number varies between $175,400 (bottom-third of couples by income) and $404,500 (upper-third of families by income). Those costs include food, clothing, health care, personal care, recreation, education, transportation, child care, and shelter. Considering university education will require additional $20,000 – $64,000 for a four-year degree, the above noted numbers may very well be conservative estimates.
2. Group Benefits: It can often happen that one of the spouses has a great group benefits plan at work that covers the other spouse as well. In this case, especially if another spouse does not have group coverage, there is an opportunity to reduce your insurance costs because one spouse can avoid buying a separate health insurance plan.
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3. Adding another beneficiary: If your previous life insurance policy named, for example, your parents as beneficiaries, consider including or changing your spouse as a/the beneficiary.
4. Family life insurance: As an alternative to two life insurance policies for each spouse, you can get one policy for both of you, which often results in lower premiums overall. This policy is often called family or JFTD (joint-first-to-die) policy. Joint-first-to-die policies pay only at the first death. It is important to know if one spouse dies, the surviving spouse will not have life insurance.
5. Multi-life discount: If you prefer to keep separate policies after the marriage and get the policies from the same provider, you might benefit from a multi-life discount.
6. Look for bundles: Bundles still work. If you or your spouse already have a home and/or auto insurance provider, there may be an option to get a bundle discount when adding a life insurance policy from the same company. Some insurers, called universal insurers, offer all insurance products – life, property and health insurance.
7. Affiliated providers: If after marriage one of the spouses has access to an affiliated insurance provider, such as for unions, teachers, nurses, or post-secondary alumni, the same discount may apply to the spouse.
8. Family plans for health insurance: Some insurers offer family plans for health insurance (here we speak about extended health benefits which are not covered by the government, e.g. by OHIP). These plans can be sometimes cheaper than having two separate health insurance policies. In this case, it may be possible to have a primary insured person and other members of the family insured on one policy.
9. Get rid of mortgage insurance: If you have a joint mortgage and have a life insurance policy in place, consider cancelling your mortgage insurance. A big enough life insurance policy can typically cover all your necessary outstanding mortgage payments.
10. Get rid of credit insurance: Eliminate line of credit insurance or credit card life insurance. Like mortgage insurance, these insurance policies are typically not a necessity.
11. Include a trustee: If adding a child under the age of 18 as a beneficiary, be sure to include a trustee. The trustee should have solid financial situation, be in good health with a long life expectancy, and be a person you know well and trust.
12. Forgetting coverage from group insurance: Do not forget to factor in group insurance and other outside life insurance policies when determining your total needs for life insurance for your family.
13. Second marriage: If it is a second marriage, then already existing plans may have an irrevocable beneficiary designation where the beneficiary cannot be changed. This is important to know: a revocable beneficiary can be changed by the policy owner without the signature of the beneficiary. An irrevocable beneficiary requires that policy changes can be made only with both signatures: the owner of the policy and beneficiary.
We thank Tamara Humphries from “NoMedicalLifeInsurance.ca” for sharing these insights. Insurance topics in marriage are similar to financial topics in marriage – they are not the easiest ones to discuss with your spouse, but it should be discussed and reviewed on the regular basis. As family situations change, so do insurance needs – InsurEye can connect you with a trusted insurance expert who can help to navigate through this complex topic – from simple term life insurance policies and funeral insurance plans to complex whole life / universal life insurance products.