It’s beginning to look a lot like Valentine’s Day. Retail displays overflow with heart-shaped sweets, whimsical greeting cards and other love-laden products designed to pull at our heartstrings. Love — or at least the illusion of it — is abundantly in the air.
The most commercially amorous day of the year is fast approaching and you can expect roughly 6 million couples to get engaged on February 14. Sounds great, doesn't it?
Or does it?
“It's the high school reunion you have every year,’’ Boston radio host Lauren Beckham Falcone once told The Boston Globe. “You’re constantly faced with what you don’t have.’’
The timing of Valentine's Day isn't so great either.
“It comes right after the holidays, when everyone’s always asking, ‘So, are you seeing anyone?’ It’s the pile-on effect," Falcone added.
And for those feeling like Falcone, here' s a fun fact on love. Many of those 6 million canoodling couples mentioned above (around 40-50 percent according to the American Psychological Association) will see their marriages end in divorce. You might be feeling better already.
So, this Valentine's Day here at insuranceQuotes we've decided to focus on coupling and uncoupling this February, and all the insurance pitfalls that come with navigating either. Consider us your equal opportunity insurance informer on marriage and divorce for Valentine's Day.
Determining how insurance will impact your marriage — or divorce — always should be high on your personal finance checklist.
Adding a spouse to your policy or watching your auto premiums go down as a married couple can be a fun topic of conversation. Sharing your life (and expenses) also can be a great boon to your pocketbook. Talking about life insurance beneficiaries, however, may seem a little less romantic.
And when it comes to divorce, all topics (and that definitely includes insurance) usually start on a sour note.
“When discussing the financial aspects of a divorce or a breakup, insurance considerations should be a key component in ongoing and final decisions,” says Jeanne M. Salvatore, senior vice president and chief communications officer for the Insurance Information Institute.
“If you are separated and your spouse or partner is paying the insurance bills, make sure to provide your contact information to the insurance company as well,” Salvatore adds. “This way you can be notified if your spouse is in arrears. You don’t want to find out after an accident that your coverage was cancelled for lack of payment.”
Because many employer-based plans include an option to add a spouse, once you are married, you should review your respective plans to see what services are covered. Doing a cost assessment of premiums and copay/coinsurance associated with each plan is also important. Don’t forget to review family coverage options if children are in the existing picture or on the horizon.
Usually you can add a spouse to an employer policy at any time during the year because it's considered a "qualifying life event." That means you don't have to wait for the company's open enrollment period.
On the other side of the equations, once a divorce is final you will immediately be dropped from your former spouse’s plan. The good news is that you have a few options. If you wish to continue being covered on your former spouse’s plan, you can pay it yourself through COBRA, a law that permits family members who lose group health insurance because of divorce or other life changes to buy the coverage for up to 36 months.
If your employer offers coverage, opting-in will most likely be a more affordable than paying for COBRA. You can purchase a plan directly from a health insurance exchange, though keep in mind that Obamacare may be repealed under the Trump administration. Or, you can always purchase health insurance from a private company, but it's smart to shop around first.
Life insurance provides financial support in the event a partner dies. Life insurance generally falls under two main categories: term life insurance and whole life insurance. Payouts can cover ongoing, standard expenses such as rent, mortgages and car payments, as well as unexpected expenses such as debts and funeral costs.
Once you're married, you will want to review your financial obligations to determine which type of policy is best for you and your spouse. Because beneficiaries are named by the policyholder (the person who pays for the policy), it’s wise to confirm that you — and not someone else — is the one listed on the policy.
Already have a life policy? Now may be the time to review your beneficiaries.
"After you're married, you probably want to make your new spouse your beneficiary in place of your parents or an ex," says Matt Rogers, an Allstate agency owner in Georgia.
If newly divorced, you as a policyholder can decide whether or not to change the beneficiary under your policy. If you do not have children and you have a permanent policy, you may opt to cash in your life insurance policy.
However, if you do have children and you are the primary caretaker, keeping your ex-spouse as the primary beneficiary on your policy may be wise to protect child support or alimony income. If your spouse is no longer in the picture, designating a trusted family member or friend as the primary beneficiary in the event of your death will help protect your children.
Renter's and homeowner's insurance
Renter's insurance, like homeowner's insurance, ensures the value of your household possessions against unexpected damages and injuries, and provides liability coverage. While the two are similar, there are differences; for instance, homeowner's insurance covers the structure itself while renter's insurance does not.
And that engagement ring? It's usually added on as a rider on either your homeowner's or renter's policy.
"Before you give the ring to your fiancée, it should be covered on your policy," Rogers says. "However, once your loved one accepts the ring, it is legally hers and she should protect it with a rider on her insurance policy."
If you’re just moving in with your spouse, combining your coverage by adding your spouse onto your existing policy (or vice versa) is usually the most affordable solution. Keep in mind that you will need to extend the coverage to add your spouse’s possessions to what is already being covered.
Most homeowner's policies contain language that automatically includes a spouse. However, it is wise to double check just in case.
"Depending on what you own, you may want to bump up your personal property coverage — the portion of the policy that covers your 'stuff,' or personal belongings — to help make sure your now-combined belongings are insured," Roger suggests.
If you are moving out and moving on you will want to take out a new renter's or homeowner's insurance policy. If you own the home you are vacating, the homeowner's policy will continue to be in your name. However, if you are the one staying, you should check your current policy to make you’re your existing coverage is appropriate for your new situation.
Also be sure to double check the laws in your state before buying a home once you're separated but before you are officially divorced. Community property laws vary and you may be surprised to learn your ex may be entitled to a portion of your new digs.
Combining auto insurance policies after you are married generally saves you money through a multi-vehicle discount. But there are instances in which keeping separate policies may be less expensive.
Factors that go into play include yours and your spouse’s driving records, what types of cars you two drive and how many miles driven per year. Couples should review their driving histories together before making any changes to their auto policies.
After a divorce, you should keep your insurance company abreast of changes, such as a change in address or if you transfer ownership of a vehicle. If you share a policy under your name, it is best to remove your ex-spouse. This will protect you from liability if he or she gets into an accident or gets sued.
Expect your auto rates to increase if you are no longer insuring multiple vehicles. For those exiting a bad relationship, however, that's probably a small price to pay.