iQuanti: Buying a life insurance policy is likely one of the last things most couples are interested in thinking about after they've just said "I do." But, somewhere between the honeymoon stage and baby fever, newly married couples need to ensure that a plan is in place for the future they're creating for themselves.
Why newlyweds need life insurance
It's important for married couples to consider getting a life insurance policy to protect their future no matter their age. Getting married means there is another person to be responsible for, and couples need to make sure their spouses are financially supported in the case of sudden death due to illness or otherwise.
Newlyweds with life insurance can guarantee that their spouse can support themselves and their children and uphold the same lifestyle they've always maintained, including car payments, mortgage payments, and education.
When to purchase life insurance
It's a common misconception that life insurance should be purchased only if and when a couple has children. Life insurance is not just to protect children, but can also affect the remaining spouse.
The best time to get life insurance as a couple is when finances are combined either before or after the wedding day. Instances like putting a down payment on a new home together, opening a joint bank account, purchasing a car, starting a business or buying commercial property are all great reasons for newlyweds to establish a life insurance policy.
Types of life insurance policies for newlyweds
There are two types of life insurance policies that can benefit newlyweds depending on their financial goals: term life and whole life.
Term life insurance: This limited-term life insurance policy provides coverage at a fixed rate for anywhere between 10 to 30 years. It's the more affordable option compared to whole life insurance.
Whole life insurance: This is considered a permanent life insurance policy and protects the insured for their entire life. The person paying for this type of insurance will pay a set amount that does not change during the policy's life. The policy doesn't expire and offers cash value along with the death benefit.
Beyond selecting whole or life insurance, there are also options for joint life insurance policies.
First to die policy: This policy provides coverage to the spouse that passes away first. The remaining spouse would have to pay for a separate policy, so their dependents are financially taken care of in case of their passing.
Second to die policy: The second to die policy provides a payout to beneficiaries once both spouses die. If both members of a couple are financially independent but there are dependents such as children, this policy may make more sense.
Even though joint policies are available, it's more common for married couples to have two separate life insurance policies for convenience and to ensure that each is appropriately covered no matter who passes away first.
How much life insurance do newly married couples need?
Every couple will need a different death benefit amount depending on what their financial situation looks like. After taking a look at income, expenses, and debt for both spouses, as well as any assets, newlyweds can come up with an amount that they feel comfortable with.
On top of discussing income and expenses, couples also consider how much they want to leave behind for their beneficiaries and the cost of funeral services, burial arrangements, and special requests.