Marriage is an emotional and financial package deal

Five key financial matters you need to consider before flying off on your honeymoon

MARRIAGE is not only about taking care of each other’s emotional well-being, but also your mutual financial well-being. So while you’re planning a lifetime partnership with your loved
one, here are five financial questions to ask once you’ve popped the question:

What are our financial needs and responsibilities?
As depressing as it may be, it’s important to discuss what would happen if you or your spouse were to suffer a debilitating illness, injury or death. Most young couples don’t have many financial assets,so at this stage of your lives, life insurance will probably need to focus on protecting your income-related needs. It’s there to ensure you can afford your debt, everyday expenses, and healthcare costs if something should happen to either of you. This could include paying off your car finance or the mortgage bond on a new house and arbitrary debts, such as the credit card debt you may have notched up to pay for the honeymoon. A qualified financial adviser will be able to help you choose the best cover. And remember while you typically only need to protect your income
until retirement, there are some basic household expenses and health care costs that will be there for life. So you’ll need to take in to account how much provision you’ve made for retirement when looking at your life and disability cover needs.

Are our life cover policies flexible?

As newlyweds, you may be expecting even more change moments later in your life together, particularly if you’re planning to start a family someday. Although the number of pay cheques you’ll need to protect will never be higher than they are today, you may want the flexibility to increase the monthly cover, as your pay cheques will hopefully take big increases later. But as you grow older, changes in your health and lifestyle may make it more difficult to get the cover you need. Later in life, insurers may charge you more – or even decline certain cover – as your risk increases with age. The life insurance policy you take out today therefore also needs to offer you future insurability, making it easier to change or increase your cover when your needs and circumstances change.

How can we ensure an 3 affordable policy will still give excellent cover?

Affordability is usually a big concern. With most couples today having to pay for their own weddings and carrying the costs of setting up house together, getting married can put huge financial strain on the budget. As tempting as it may be to opt for the cheapest premium, it’s important to make sure that you do not structure your policy at the expense of future sustainability.
Most life insurance policies start off with a lower premium – and lower cover – at the start, but then start to increase your premiums and cover with time. However, your financial liabilities are generally at their highest earlier in life when you have more future pay cheques to protect, and more debts to pay off. Needs-matched policies exist in the market that can be structured sustainably to offer you more cover upfront when you need it, and reduce over time when you have fewer financial obligations. These policies are also more flexible than traditional products, making it easier for you to increase your cover for certain needs later in life – such as critical illness cover and healthcare expenses- by using the premiums for cover (for income, debt and child-related expenses) you no longer need.

What about dread disease cover?

While protecting your income will ensure you are able to afford your day-to-day expenses and pay off your debts if something were to happen, this cover won’t make provision for unforeseen expenses that may arise if one of you were to become injured or ill. Dread disease or critical illness cover can help you make provision for any additional expense needs that may arise from serious illnesses or injuries like the cost of lifestyle adjustments or shortfalls in medical aid payouts. Again, your financial adviser will be able to guide you on the appropriate level of cover for these needs,
taking into account the extent of your medical cover and your affordability concerns. Be sure you sign up for a product that includes cover injuries and traumatic events too.

Should my spouse be my sole beneficiary?

Listing your spouse as a sole beneficiary of your life insurance policy may not be as considerate as you think. Many young couples not only take care of each other, but also have parents or siblings
to support. Ensuring that you’ve thought about these other dependants in setting up your beneficiaries will prevent complications in the event where both you and your spouse die simultaneously,
and also simplify matte.

This article was originally published in the Cape Argus on 21 May 2019.

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