Life Insurance for Newlyweds
Getting married is one of the biggest milestones in life and one of the biggest reasons to start looking at life insurance coverage. Once you are married, you are now planning everything as a couple rather than as individuals. It is also most likely that you are going to be taking on more responsibilities such as buying a home and starting a family. Life insurance should be the cornerstone of your financial plan. Here’s what you need to know about life insurance for newlyweds.
Planning as a Couple
Now that you are married, you will most likely be sharing expenses with your spouse. Essentially, your assets and debts will now be comingled. Most young couples may have credit card debt and other household debts and expenses that they share. It is important to ensure that your spouse is protected in the event you are no longer around to contribute financially. Even if you don’t have children yet, purchasing life insurance makes sense in many cases.
Taking on More Financial Responsibilities After Marriage
Getting married is a big step. Once married, you will most likely buy a home or starting a family. Depending on your income situation, you might even decide that one parent will stay at home and raise children.
Buying a New Home – Taking on a mortgage is a 30 year responsibility in most cases. The last thing you want to do is leave your spouse with the burden of paying the mortgage on their own if you’re not around to contribute. Your outstanding mortgage balance is an important part of the equation when determining your life insurance coverage amounts. You might get offered mortgage insurance from the lender when you buy your home. In most cases, it makes sense to opt for an individual term life insurance policy instead. Here’s what you need to know about mortgage life insurance.
Starting a Family – Most couples will start a family within a few years of getting married. Kids cost a lot of money. In fact, the USDA determined that a middle-income family with a child born in 2013 can expect to spend about $245,340 for food, housing, childcare and education, and other child-rearing expenses up to age 18. That doesn’t even include the cost of college! At a minimum, it makes sense to purchase life insurance coverage that lasts until your youngest child is no longer financially dependent on you – usually 23 to 25 years old.
Stay at Home Spouse – There are instances when parents will choose to keep one parent at home to raise the children. Single income families are obviously more financially vulnerable than dual income families. If the sole breadwinner passes away, it could mean financial disaster for the surviving spouse. Protecting the sole breadwinner is most important. Although a stay-at-home parent doesn’t earn a paycheck in the traditional sense, they perform valuable services at home. These services would need to be outsourced in most cases if a stay-at-home parent were to pass away unexpectedly. According to survey done by Salary.com in 2014, stay-at-home parent’s services would be worth $118,905 per year. That includes childcare and other domestic household services. It makes sense to purchase life insurance for stay-at-home parents in many cases.
Life Insurance Strategy for Newlyweds
For most newlyweds, the budget can be tight at the start of a marriage. That doesn’t mean that life insurance shouldn’t be a priority. Most couples should look at term life insurance coverage first. Term life insurance offers coverage durations of 10, 15, 20, 25 and 30 years. It is also the least expensive life insurance protection you can buy. If you prefer more expensive permanent coverage but it’s not in your budget right now, don’t worry. You can purchase term coverage now and you’ll have the option to convert it to permanent coverage down the road without having to show proof of insurability.
How Much Life Insurance do Newlyweds Need?
The main reason for life insurance is to replace income in the event of death. The goal is to make sure that your beneficiaries are provided for if you’re not around to take care of them. There’s no perfect way to know exactly how much your loved ones will need but here are some factors you should consider.
- How many years of income are you trying to replace?
- What debts do you want to cover? (i.e. entire mortgage, credit card debts, college fund etc.)
- Will your surviving spouse work or stay at home?
- What assets do you have?
- How much will your dependents receive in Social Security benefits?
These are just a few of the factors that you need to consider when determining the how much life insurance you need. Luckily there are some great calculators available online to help you piece it all together. Our favorite is the life insurance calculator at LifeHappens.org.
How Long Do Newlyweds Need Coverage?
The duration of your coverage will depend on your overall coverage goals. You can choose from several different life milestones:
- Until your mortgage is paid off (usually 30 years)
- Until you youngest child is no longer a dependent (23 to 25 years old)
- Until your planned retirement age (do you plan on retiring at 60?65?70?)
- Your entire life
The coverage duration you choose should protect you until your death would no longer create a financial burden for your loved ones. In most cases, permanent coverage is not necessary considering the fact that your financial obligations will diminish when you and spouse become empty nesters or retire. Here is some more information on choosing the right length of coverage.
How Much do Newlyweds Pay for Life Insurance?
The good news is that term life insurance rates have never been lower and most couples can find the right amount of coverage at an affordable price. Here are some sample rates for male and female applicants. The annual rates are for 20 years of coverage for non-smoker applicants who qualify for the best health rating. Rates are as of 4/26/16 from Protective Life and AIG.
| Male | $250,000 | $500,000 | $750,000 | $1,000,000 |
|---|---|---|---|---|
| Age 25 | $153.16 | $239.50 | $302.50 | $412.96 |
| Age 30 | $156.06 | $240.46 | $360.69 | 412.99 |
| Age 35 | $161.50 | $254 | $349 | $444.00 |
| Female | $250,000 | $500,000 | $750,000 | $1,000,000 |
|---|---|---|---|---|
| Age 25 | $136.50 | $204 | $274 | $344 |
| Age 30 | $139 | $209 | $281.50 | $354 |
| Age 35 | $145.87 | $221.26 | $331.89 | $371.16 |
As you can see, the rates for coverage are very affordable. Even if you have some minor health issues, we can shop over 40 of the top companies to find you the best rate.
Life Insurance for Newlyweds Doesn’t Have to be Complicated
In most instances, a simple term life insurance policy can provide adequate protection until your children are grown, your house is paid off or your retirement. Newly married couples have to start thinking about planning as a couple immediately. Married life can get hectic with buying a home and starting a family. You want to handle your life insurance planning while you are young, healthy and have the time to do it.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
