Understanding Your Life Insurance Options as Newlyweds

by Susan Paige
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Preparing for a wedding is full of excitement and anticipation, and after the celebration, you have the adventure of building a life together to look forward to! As you plan your shared future, financial security should be at the top of your list. One of the best ways to safeguard the financial health of your new family is through life insurance. 

The Benefits of Life Insurance as a Newlywed

Supporting Your Shared Goals

Being married means a shared future, goals, income, and debts. Should one of you pass away, would your spouse be able to remain in your family home on a single income? Raise your children in the way you envisioned? Send your children on to higher education? Life insurance supports your long-term plans, allowing you to plan the financial aspects of your life together while ensuring your spouse and children have the best chance in life, even without your financial contribution.

Paying Outstanding Debts

Should one of you pass away unexpectedly, your partner may face the prospect of paying debts you incurred as a couple. You may be responsible for paying the mortgage, car payments, and even your spouse’s student loans without your partner’s contribution to household income. The death benefit from a life insurance policy can help your surviving spouse pay off these debts without facing financial strain due to reduced family income. 

Peace of Mind for Your Future

Not only will life insurance provide peace of mind that your spouse and children are taken care of, but it can save you money by securing a life insurance policy early. Since newlyweds are often young and healthy, premiums are lower, making financial security smart and affordable. Term life insurance policies can provide coverage for periods up to 30 years into the future, and those lower premiums add up to significant savings over time. 

Expecting a Baby?

Starting in life can be challenging – you’re learning to juggle the demands of your first home, climbing the career ladder, and creating a family. Consider how your partner would manage should you unexpectedly pass away. Would they have the financial means to support your new family, maintain their lifestyle, and afford the help and childcare they may need? Life insurance can ease this burden by providing a financial cushion to support your surviving spouse with raising your children and limiting their financial strain. Your children can still have the best opportunities to succeed in life, even if you cannot be there in person.

Life Insurance Options: Term vs. Permanent

Permanent life insurance includes whole-life and universal-life coverage and lasts throughout one’s entire lifetime. They offer lifelong protection and often carry a cash value that you can leverage if needed. While the premiums on permanent life insurance remain fixed from the day you obtain your policy, they are usually higher than term life insurance options. Many permanent life insurance plans also include a savings component, allowing the policyholder to use the policy as an investment vehicle to grow your wealth. 

For many young newlyweds, term life insurance policies may be a simpler and more affordable solution. Term life insurance protects temporary needs – such as the duration of your mortgage or until your children are no longer dependent on your income – and lasts for a pre-set period, which typically ranges from 10 to 30 years. Should you choose to renew your policy upon the conclusion of the term, you’ll often pay a higher premium, given that as you age, your health status may change. Many term insurance policies can be converted to permanent insurance policies should your priorities or coverage needs change. 

While there are joint life insurance policies available, these tend to be more expensive than individual policies. Note that some joint policies also do not pay out a death benefit until both spouses have passed. 

An affordable option for many newlyweds is to purchase separate term life insurance policies. Individual policies give each of you the flexibility to customize coverage to your specific needs. Because most families will have fewer debts and expenses after 20 or 30 years, you may not need the lifelong coverage and associated cost of a permanent insurance policy. Should the marriage fail, having individual insurance policies makes it easier to move forward separately. 

For some families, the ideal solution may be a combination of both term and permanent life insurance policies. 

How Much Life Insurance Should I Buy?

The rule of thumb when it comes to life insurance is to purchase a policy with a death benefit that is at least 10-15 times your annual income. You should also factor in existing expenses and liabilities so that your spouse can pay off significant debts, such as your mortgage, and be prepared for future expenses, such as post-secondary education. 

Stay-at-home parents should also get life insurance to make it easier for the surviving spouse to account for household contributions, childcare, and final expenses.

The bottom line: every couple is different. The most affordable life insurance option may not necessarily offer the breadth of coverage necessary to meet the future needs of your growing family. An insurance advisor can be your best resource in guiding you to life insurance options that make the most sense for your family’s specific budget, lifestyle, and coverage needs. Whatever choice you make, take comfort in the fact that by investing in life insurance as newlyweds, your new family has the protection it needs to take on life’s expected and unexpected twists and turns with confidence!  

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