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Marriage vs Cohabitation: A Financial and Legal Quick Look

Financially speaking, there are some benefits to getting married as opposed to just cohabitating.  That’s not to say that one should get married only to take advantage of certain financial perks.  When it comes to perks, there are some things that are good to know before you decide to take the plunge (or not). Let’s take a look at some examples and compare marriage vs cohabitation.


Auto Insurance
When it comes to different types of insurance, there are a few benefits to being married. In the case of auto insurance, you may find (depending on the driving records of you and your spouse) that your rates are cheaper together than they are compared to keeping separate policies. Insurance companies hire actuaries that study risk and rate policies based on assumed risk. In a study done in 2004 by the National Institutes of Health, a test group of over 10 thousand subjects revealed that never-married single drivers had twice the risk of injuries from car accidents than married drivers did. According to personal finance expert Laura Adams, a married 20-year-old pays 21 percent less than a single 20-year-old for the same policy.
Having more than one vehicle can also benefit a couple when it comes to auto insurance rates. Many auto insurance companies offer a multi-car discount. Combining policies with more than one vehicle can mean a discounted rate on each vehicle added to the policy. While you can also take advantage of the discount if you are single and are the registered owner of multiple vehicles, you will need to check with your insurance company to see if you are allowed to add a significant other’s vehicle to your policy if it is only registered to them.  If you are not a co-owner listed on the registration of your partner’s vehicle, you may not be able to insure it under your policy.


Health Insurance
When you are living together and one partner needs health insurance, they cannot be added to the other’s health insurance. When couples marry and one is without health insurance, they can be added to their spouse’s policy. This can be particularly beneficial to couples where one does not have insurance through their employer or one partner is a stay-at-home parent.


When filing taxes, sometimes it is beneficial to file jointly. This can only be done if a couple is married. If both parties make the same amount of money or close to the same, then they may be in a higher tax bracket and end up paying more. If one partner makes significantly less or is not employed, it is more beneficial to file together because they will get more of a tax break.



With IRA accounts, if a married couple files jointly and one of them dies, the surviving spouse can claim the deceased spouse’s IRA and roll it into their own. A spouse that is unemployed and has an IRA can accept money from an employed spouse’s IRA.


In legal matters, spouses can take advantage of marital privilege, communications privilege, and crime victim’s recovery benefits. If one spouse is the defendant in a criminal case, the other spouse can refuse to testify against their partner. With communications privilege, communications between spouses are considered private and can be protected by law. This means they cannot be entered into testimony in a court of law.
Crime victims recovery benefits can be collected by the spouses of crime victims. If someone is the victim of a crime, their spouse can apply for financial benefits to help with the medical costs, funeral, or other such related costs.