Newlywed life is full of exciting elements, especially after the wedding and the honeymoon. You may be eager to settle into a new routine while being aware that certain plans for the future must be made jointly.
While it may not be the first thing that comes to mind as a newlywed, developing a solid financial plan for your future should be high on your list of priorities. In addition, your financial strategy should include risk planning, which means thinking about what could go wrong, even if it’s unpleasant. This often involves taking out life insurance.
Newlyweds, whether young or old, financially well off or just starting out, often have the same questions about their new marital status. So let’s take a look at five common questions about life insurance newlyweds ask.
1. How much life insurance do newlyweds need?
The amount of life insurance you need for your new married life depends on a few key things.
First and foremost, it will be determined by all of your financial obligations. What debts and responsibilities would you each leave to your partner if you or your spouse died? Making sure your expenses and obligations are covered is a good starting point for determining how much life insurance you need. A mortgage, car payments, student loans, credit cards, or other personal debt could all be on your list.
Next, you need to figure out how much money your spouse expects you to take home each year. Is it necessary to replace this income if you die? This calculation must be made by both partners before taking out their own insurance to protect the other. Your daily expenses, as well as monthly, annual, and incidental financial events, should be factored into your calculations.
Finally, you may need to consider your future life insurance needs. You and your spouse need to think about any current or future costs for dependents (like children) as well as any retirement savings you could lose if your partner dies.
2. What type of life insurance do newlyweds need?
The type of life insurance you need as a newlywed is determined by your budget and the extent of your coverage. If your partner dies, you may only need insurance to cover funeral expenses and necessary living expenses. On the other hand, you may need more elaborate financial planning.
To meet your specific needs, you and your partner can choose from a wide range of life insurance offered by various insurance companies. Most of them, however, can be categorized as term or permanent life insurance.
Term life insurance
Term life insurance is a type of life insurance that is taken out for a fixed period. If you die during this time, your spouse (or other beneficiary) will receive a death benefit in the specified amount.
Permanent life insurance
Permanent life insurance does not have a time limit like term insurance. It covers you for the rest of your life and provides not only a death benefit but also cash surrender value. Although permanent insurance costs more, there are affordable options even for newlyweds just starting out in life.
3. Is life insurance necessary if we don’t have children?
One of the common reasons couples purchase life insurance is to continue supporting their children if their financial contributions are no longer available. But what if you don’t have kids? Is life insurance still necessary?
The answer is usually yes. Let’s take two examples.
No kids now, but maybe later?
If you don’t have kids now, but plan to have them later, getting life insurance before you have kids is always a good idea. First, life insurance rates are generally lower when you’re younger. So by buying insurance now, you could keep your rates lower for a longer period of time.
Also, your ability to purchase life insurance depends on your overall health. By buying insurance now, if a future health problem made you uninsurable, you would have taken the risk into account and would be covered.
No kids now…and probably never.
If you don’t plan on having children, you’ll probably need life insurance to protect your partner – at least until you and your partner are comfortable enough financially and have enough savings to cover all your financial needs in the event of the death of one or both of you.
You may also want to purchase life insurance for any other family members who rely on you, or even for charitable purposes.
4. Is life insurance affordable?
The world of life insurance is vast, and there is insurance for almost everyone. Most couples are surprised to learn that life insurance is cheaper than they thought.
First, determine how much life insurance you think you need. Then, if you can’t find insurance with a premium level that fits your budget, try starting with a lower premium and gradually increasing coverage. It is always better to have light life insurance than none at all.
5. What is the purpose of life insurance?
Life insurance is another way for newlyweds to show their partner how much they are loved and taken care of. You are providing a way for him to continue living and caring for him and others if you die. The weight of grief is already heavy enough without adding financial stress.
Life insurance can also be used as a financial planning tool. You can create a life insurance policy that provides more than just a death benefit by working with a licensed insurance agent. If you choose a permanent policy, your life insurance may include a cash value, a critical illness clause, or even long-term care benefits.
It’s easy to get caught up in the whirlwind of newlywed life, but remembering to build a solid financial foundation will be a rewarding addition to your family plans. Now is the perfect time to speak with an experienced agent to make sure you and your spouse have all your life insurance questions answered.
We wish all the newlyweds the best in their new life together!