Today, my wife, Sheri, and I are driving from Dallas to Tuscaloosa, Alabama to celebrate and support my niece as she marries one very lucky guy! It will be a great time celebrating their love and cheering them on, not to mention the family entertainment that usually accompanies a gathering like this.
The wedding got me thinking about what insurance advice I’d give a young couple just starting out. I talk with couples all the time about home, car, and life insurance, but usually we’re focusing on one or two of them because it centers on solving an issue they’re facing such as getting their own insurance, buying a home, a pregnancy, etc.
The question I’ve been rolling around in my mind this week is: What would I say to a young couple just starting out? With that in mind, here are the 4 areas I’d recommend a couple discuss and explore together:
- Find an Insurance Advisor
- Protect Your Car(s)
- Protect Your Home
- Protect You
Find an Insurance Advisor: There are a ton of people who will sell you a policy in person, over the phone or online. There are only a few people who will truly advise on what you need without trying to make a sale. Here’s what to look for:
- Find someone who’ll take the time to truly listen and then provide solid advice.
- Do they explain what’s covered and what’s not covered?
- If all they are talking about is the price of the policy or they don’t answer your questions, move on.
- Compare more than one provider or option.
The four reasons people work with Wise Insurance Group, seek me out, or refer their friends, family and clients are:
- They know I don’t sell anyone anything. It either makes sense or it doesn’t.
- People appreciate the advice I provide.
- They’re grateful we don’t rush through the process.
- I answer all their questions even if it takes multiple conversations.
When you find someone like this, hire them.
Protect Your Car(s): For most newly married couples, your biggest assets will be your cars. It’s also one of the larger liability areas. Car insurance is designed to protect your car and you financially when something happens like an accident, regardless of who’s at fault.
- Explore higher limits than state minimums: Most states require a certain minimum level of liability coverage that won’t fully protect you if you hit someone driving a new Accord, Camry or Taurus. Move them up so you have at least $50,000 in coverage for property damage.
- Think about higher deductibles: Go with at least a $250 comprehensive and a $500 collision deductible. Any higher deductible won’t make sense because the difference in what you’d pay vs. what you owe will not be recouped in two years.
- Carry uninsured motorist protection: Not everyone out there who drives next to you has insurance. Add enough coverage to protect you and your car if an uninsured or underinsured driver hits you.
- Examine optional coverage: Consider adding towing / roadside assistance and rental car reimbursement at a minimum. These can be invaluable if you lock your keys in your car, need help changing a flat, run out of gas, or need a tow. Having a rental car if yours is in the shop due to a claim is huge if you work on one side of town and your spouse works on the other side of town.
- Cover your gap. If either of you has a car with a loan on it, see if you can add gap coverage. Most cars depreciate faster than the manufacturers advertise and that means if your car is totaled, you may owe more on it than the insurance pays for it. Gap coverage helps protect you financially if this happens.
- Think longer term: Many insurers offer a 12 month term in addition to a 6 month policy term. If you don’t have any tickets or accidents that will roll off in the next 6 months, go with an annual policy. This locks in your rate for a full year and slows the upward premium creep.
Protect Your Home: Most newlywed couples rent their first home, so whether it’s required or not, get renters insurance. The cost will be between $10 and $20 a month depending on the amount of contents coverage you need and that’s a small price to pay to protect your stuff if something happens. Renter’s insurance will protect you in two ways:
- It covers all of your personal property; everything you moved into your apartment (clothing, furniture, kitchenware, etc.).
- It protects you if someone gets hurt in your home and they sue you for negligence.
In addition, “schedule” valuables such as your engagement ring, musical instruments, computers, etc. Scheduling such items allows you to protect them to their full value and covers them for any kind of loss. Most policies protect items up to a certain limit such as $2,000 and don’t cover them for mysterious disappearance such as being misplaced.
If you’re buying or own a home, review your home insurance to make sure you’re completely covered if something bad happens. Items to review are:
- Do you have enough to replace your home if it’s a total loss?
- What’s your deductible for the roof or a water leak?
- Are your valuables scheduled?
- Are you carrying at least $300,000 (what I suggest) of liability limits?
- Does your medical coverage policy have at least $5,000 of coverage?
- Are you both listed on the policy? If not, be sure to add your spouse or partner.
If you’re not sure what these items are, then read my Guide to Buying Home Insurance and compare that to what you have http://dev.wiseinsurancegroup.com/home-insurance-buyers-guide/.
Protect You: Both of you need protection against what life throws at you. That means you need to consider three types of insurance for both of you:
- Life insurance
- Health insurance
- Disability insurance
I’ve seen people lose a partner or spouse at young and old ages. Get your own life policy to ease the transition from a two income family back to a one income single person. This may also come in handy if one of you dies from a long illness and leaves behind medical bills. Maximize what your employer provides but have your own.
Take full advantage of your employer’s health insurance and review your options. Keep your co-pays at a 90% / 10% ratio or higher. If it’s a traditional PPO plan, then be very grateful! If it’s a health savings account, the contribute every month to the savings account.
Most employers offer short term and long term disability as a part of their benefit package. You need both. They will be very important if one of you becomes hurt and can’t work for 3, 6, 12 months or even longer.
What advice would you give a new couple? Share your advice, comments, and questions with me on our Google + and Facebook pages, or in the comments section of our blog. I’d love to hear from you!