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Your Money! My Money! Our Money!

Congratulations on your commitment to each other as partners for life!

Everyone’s personal and financial situation may be unique. As such, there are an infinite number of ways to address these matters. Here are 5 quick tips to help keep your marital bliss.

Finance and romance go hand in hand.

Get the money matters out of the way early, particularly when you are head over heels in love.

  1. Be realistic and have honest and serious conversations with your partner about finances.
  2. Set specific goals as to how much each party should spend without consulting the other.
  3. Agree to and put a financial plan or roadmap in place to help achieve your objectives.
  4. Life events can change the best laid plans, be prepared with options.
  5. Be flexible.

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Finance and Marriage Matters

Who to trust for financial advice?

Should marriage be a union of finances?

Not necessarily. Financial situations can be complicated at best and could involve family trusts, investments, inheritance and other issues. There certainly can be private accounts, depending on the situation (s) but there should never be secrecy. A good rule of thumb is to have a joint account for routine and fixes expenses such as rents, food, entertainment and others with an agreed upon plan for overall expenditures and investment. Given sufficient time, experience and trust in a marriage, separate and joints accounts generally fall into place. Here, there should truly be a meeting of the minds.

Finance and Marriage Matters

Are there gender differences in finances?

Most experts agree there are gender differences. Men are less prone to take advice, financial or otherwise. But it’s no excuse for ego or selfishness to get in the way of family matters. Have informed. Every couple should have a CFO for the family, i.e, someone who is knowledgeable to help execute prudent decisions.

How to plan for long term security?

Marriage unions generally result in children or an extended family. As such, financial planning becomes a critical ingredient. Medical insurance plans should be immediately adjusted to the joint family.

Savings, investments, 401ks, retirement, life and disability insurance must be carefully evaluated based on joint objectives.

Long term security is a very complicated matter but it all starts with maximum saving and prudent investment. If both spouses work, try to live on one income and invest the rest.

Take full advantage of 401k and other plans, particularly where employers also make a contribution.

Call your tax advisor for guidance on all tax matters but get your Financial Advisors on board early to put a plan in place. Monitor the plan and adjust it to provide the peace of mind for long term security.

Finance and romance go hand in hand. It all starts with sound financial planning sooner than later.

Congratulations, again on this very first step to a happy union. Please do check back for continued updates on Finances.

Finance and Marriage Matters

Insurance & What It Means To You

Our previous article tackled the overall spectrum of marriage and finance. This can sometimes be overwhelming for the newlywed or those new to comprehensive financial planning.

Future articles will be devoted to key aspects including retirement, investment, and insurance. In general terms, insurance can be defined as transferring risk: as in the risk of or to health, autos, disability, job security, long-term care, untimely demise, and many others.

Insurance in itself can be a complicated matter with many components to consider in your overall financial plans. To help simplify this for the newlywed, we are going to focus on only Life Insurance in this article.

Types of Life Insurance

There are two types of life insurance, “Term” and “Permanent Life Insurance”. Understanding the differences will help you to make a better decision as to when and how much to buy but we strongly urge you to check with your Financial Advisor regarding your specific needs and situation.

Term Life

  • A specific term, usually 5 to 30 years.
  • Less expensive insurance than permanent insurance but you generally get what you pay for.
  • Less expensive insurance during the “Term” period allows for diversion of resources to investment or other household needs.
  • Policy that that does not build cash value over time and is generally payable only at death to beneficiary during the specified term, if premiums are fully paid up and in good order.
  • “Term” is the most widely used insurance, although generally less than 3% of policies actually make a payout to beneficiaries because of term expiration and or other reasons.
  • In many cases after “Term” expiration, policy holders may be “uninsurable” or the new “Term Policy” may be prohibitively expensive. Please check with your Financial Advisor on how “Term” Insurance can affect your specific situation in the short and long term.

Again, the right insurance is the one that best fit your specific needs. Term insurance can be a very effective vehicle for young couples starting out in their new life.

Do check with your Financial Advisor to see if “Term Insurance” is right for you, and can also grow with your life changing needs. Find out whether your selected “Term Policy” is convertible to permanent life insurance without affecting your insurability or the need to go through new medical/underwriting provisions.

Permanent Life Insurance

  • As the name implies, this will last for the entire life of the insured, as long as premiums are paid up and are in good order.
  • Permanent Life Insurance differs from “Term” in that the policy can build up cash values, some of which the policy holders may opt to use under certain specified situations.
  • Again, you get what you pay for, and one reason for the built in cash value is the fact that you pay substantially more for the same face amount of life insurance.
  • E.g. $500,000 policy premium will cost more over the life of the policy vs. “Term”.
  • Premiums can often be two to three times or higher for comparable insurance coverage but you need to contact your Financial Advisor for specific comparisons on this matter.
  • The costs for Permanent Life Insurance can balance off with the benefits of insurance for life, oftentimes with predictable premiums, based on the type of policy you select.
  • These policies vary significantly from one company to another, but tend to share an “investment option”.

There are three types of investment policies for Permanent Life Insurance

  1. Whole Life: The premiums generally remain constant over the life of the policy and the plan could be structured for a specific period rather than the life of the policy. Based on market conditions, whole life policies can generate dividends but they are not guaranteed. Cash value also accumulates on a tax-deferred basis.
  2. Variable Life: A portion of your premiums can be invested in funding options such as stock and bonds. Therefore, In part, this type of insurance can resemble your 401K investments. Based on the investment portfolio and your risk tolerance, you can also work with your Financial Advisor to balance your overall portfolio. But keep in mind that you the policyholder bear the risk for investments.
  3. Universal Life: Premium payments are applied to an accumulation fund that earns interest. Like the other permanent life insurance policies, accumulated cash value can be borrowed or used to pay premiums, under certain conditions.

What Determines Your Life Insurance Premiums?

Many different issues account for your relative insurance premiums and for the most part it is crafted by very skilled actuaries. Health, age, job occupation, and residency are key components.

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The better health, and younger you are in low risk types of jobs will positively impact your cost for all types of life insurance.

Most important, both Term and or Permanent Life Insurance coverage should be part of the building block for your new marriage. Again, these are important decisions for your life.

Contact your Financial Advisor to determine the plan that best meets your needs. Do enjoy your Caribbean honeymoon or wedding.

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Finance and Marriage Matters