Managing your finances as a couple

1. Discuss your finances and establish each others’ contribution

Start by discussing what your financial needs will look like if one of you becomes disabled - whether by injury or illness - and what will happen if one of you dies.

Many of you reading this will be in the earlier stages of life, perhaps enjoying life as newlyweds, or just living in a long-term relationship. Either way, it’s likely that both of you are contributing financially to the various commitments the two of you must meet. This may include a home loan, student loans, vehicle finance, insurance costs, medical aid and many others.

If one of you is suddenly unable to contribute financially to those commitments, you would need an insurance policy in place to ensure that those commitments continue to be met.

2. Understand the options available to you

Ideally, each of you should consider taking out both an income protection policy, and a life insurance policy. Those are the minimums to ensure that neither you nor your partner is financially crippled if the other is disabled, falls seriously ill, or dies.

For a more comprehensive approach to insuring your finances, you may want to consider additionally taking out critical illness cover. These are policies that will cover the related expenses that you will incur following a disability or serious illness. For example, that might include things like medical bills, or shortfalls in medical-aid payouts, or even the cost of lifestyle adjustments.

3. Implement an insurance plan to suit your lifestyle

As a younger couple, you probably have fewer assets with more expenses and loads of future expenses. For example, you are likely to buy a bigger house when you decide to start a family, or you might decide to spend your money funding more expensive cars or starting a business.

Whatever the case may be, you need to choose insurance options that are affordable enough so that you can sustain those premium payments throughout the various phases of life through which you will still travel.

For that reason, you should look at structuring your insurance plan in a way that suits your lifestyle and makes it as affordable as possible to continue paying your premiums. Basically, your insurance needs to be implemented with a long-term view so that it serves all your needs for the entire time you need it, while being affordable throughout your changing life circumstances and phases.

And finally, a note about marriage.

If you’re still planning to get married, you need to understand that in South Africa there are three different marital regimes, or ‘types’ of marriage and your marriage regime will impact your finances and your insurance. They are:

1. Marriage in community of property
2. Marriage out of community of property (without accrual)
3. Marriage out of community of property (with accrual)

If you just go ahead and get married without signing any marriage contract beforehand, your marriage will be constituted legally under South Africa’s default marriage type: a marriage in community of property. This means that, in simple terms, both of you own an equal share of everything in the marriage. And by ‘everything’, we mean everything: even debt that your spouse had before you got married. You now share 50/50 in the commitment of repaying the debt.

Alternatively, you can choose to be married out of community of property. This will require that both you and your partner enter into an antenuptial contract prior to saying your vows. The details of this marriage regime and the two variations are beyond the scope of this blog, but I’ve included it here because the type of marriage regime your union is classified under, will have an impact on your life insurance.