Let’s make one thing clear: there is no one specific type of life insurance for newlyweds. But as a married couple, buying some form of life insurance during the honeymoon phase can help provide a little financial protection for your family’s future (and possibly save you money down the road).
What Should You Know About Life Insurance for Newlyweds?
Looking into life insurance for newlyweds may not be your priority as a newly married couple, but if you think about policy lengths, it might make more sense. Term life insurance policies can last up to thirty years long, and a lot can happen between now and then.
Life insurance can help with finances if you or your spouse pass away insured. It might feel a bit uncomfortable to think about death in such a happy time, but providing each other with a bit of financial support in a worst-case scenario is an act of love.
After all, the two of you are going to build a bright future together, one worthy of some protection. With that in mind, here are four reasons you may want to get life insurance as newlyweds.
- To cover shared income. Many married couples blend their income. In some homes, one spouse is the primary income earner while the other makes less or contributes to the family in a different capacity, perhaps as a stay-at-home parent. If one of you were to pass away, a life insurance payout could help supplement lost income or help with the cost of domestic tasks like meal prep or childcare.
- To cover shared debt. As a married couple, you will likely acquire credit card debt or co-sign a loan together. If you pass away insured, your spouse beneficiary can use the death benefit of your life insurance policy to pay off shared debt or inherited debt, like student loans.
- To help protect your future. As newlyweds, it’s the two of you against the world. But in the future, it might be the two of you, a couple of kids, a goldendoodle, a house, and maybe even a small business against the world. Life insurance can help protect all of this. A life insurance payout can be used to cover house payments, establish a college fund, or pay for any expenses that could come up if one of you were to pass away unexpectedly.
- To save money. Life insurance rates generally increase with age, but when you buy term life insurance coverage, you lock in your rates for the life of your policy. Remember, you will never be younger than you are today.
How Much Life Insurance Do Young Married Couples Need?
There is no optimal amount of life insurance coverage for newlyweds. However, the death benefit on your policy should reflect your situation and goals as a couple. Some financial experts suggest purchasing coverage that is ten to twenty times your annual income, and as a young married couple, it’s a good idea to factor in debt and future goals too.
There is no magic formula to figure out your ideal amount of coverage, but the steps below can serve as a good jumping-off point.
- Step one: Multiply your income. Take your annual salary and the income from any side hustles you may have, and add them together. Now multiply that number by anywhere from five to thirty.
- Step two: Add in kids or possible kids. Children are our future, but they are also expensive. If you have children or plan to expand your family, add $50,000 to $100,000 per child to the equation.
- Step three: Estimate your debt. If you have or plan on taking out a student loan, home loan, car loan, solar panel loan, or credit card debt, add the total of these debts together.
- Step four: Account for future other expenses: Are you planning on going to graduate school or sending your future children to college? Write down the total cost of any additional educational expenses you might incur.
- Step five: Add the calculations from steps one through four together. This total amount will give you a good idea of how much coverage you might need in order for your spouse to be financially comfortable without you.
- Step six: Get a free insurance quote, play around with the coverage amounts, and factor in your budget.
What Type of Life Insurance Do Married Couples Need?
Once you have determined that you need life insurance and have calculated your ideal coverage amount, you might be wondering what type of life insurance is best for newlyweds?
The answer (again): it depends on your financial situation and goals.
Here are some of the main types of life insurance policies newlyweds might consider:
Individual Term Life Insurance: This type of life insurance provides coverage for a period of time called a term. Term life insurance policies typically last ten to thirty years. You are covered for the entire term of your policy, as long as you pay the premium.
If you die during the term of your policy, then your beneficiary can file a death claim to receive the policy’s death benefit. It's tough to think about, but if you were to pass away unexpectedly, your partner could use the money from your life insurance policy to cover a mortgage, pay for final expenses, or take some time off from work to process and grieve.
Some couples hold off on purchasing life insurance because they overestimate the cost, but term life insurance is a great option for newly married couples — it’s the least expensive type of life insurance. With Bestow, rates start from just $11 per month.
Individual Permanent Life Insurance: Permanent life insurance policies do not have terms because they provide coverage for life. There are different forms of permanent life insurance, such as whole life, universal life, and variable universal life.
Many permanent life insurance policies feature a cash value component that can be used as a living benefit by the policyholder. Life insurance with cash value might be a good option if you’re looking for coverage to last your entire life and also want a cash value component on your policy.
Joint Life Insurance: Joint life insurance is a type of life insurance policy that covers two people. It pays out a death benefit to the beneficiaries upon the death of either insured person. Joint life insurance policies may have a "survivorship" or "second-to-die" feature, in which the death benefit is paid out only after the death of the second insured person. This type of policy is often used for estate planning purposes.
Term Life Insurance for Newlyweds
After a season of wedding planning, the last thing you want to do is to fill out a complex life insurance application, submit a medical exam, and then wait weeks to hear whether or not you are approved.
Upon approval, you can purchase up to $1.5 million in coverage, select your term, name your beneficiaries, and get right back to living happily ever after.
- There is no specific type of life insurance for newlyweds, but there are a few reasons to consider buying life insurance as a newly married couple.
- Life insurance can help provide some financial protection for the ones you love. Your beneficiaries can use your policy's death benefit to pay off a house, cover a child’s college tuition, or make up for lost income.
- Life insurance premiums increase with age, so it’s smart to think about buying coverage when you’re younger so you can lock in your rate.