Marriage comes with more than just a new legal status. Spouses often combine income and debt, while taking on an increase in expenses like a home mortgage and raising a child. As you become responsible for more than just yourself, you should also prepare for any unexpected situations that will affect you both.
Finance-related topics can be uncomfortable, but they’re necessary conversations to have. According to the Institute for Divorce Financial Analysts, “money issues” are one of the leading causes of divorce in the U.S. Set your marriage up for success by discussing fundamental finances—like life insurance—before heading down the aisle.
Your current debt
If you have financial responsibilities such as student loans, a car loan, or credit card debt, your spouse will take on these debts if they’re co-signers. Even if they’re not co-signers, your spouse may still be responsible for it or have to face repercussions, like the car getting repossessed or a taking a hit on their credit score if they’re an authorized user on your credit card. In states that operate under community property laws (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), your spouse would be responsible for debts that you assumed during your marriage.
What the future holds
Marriage often jumpstarts a series of large financial commitments that can depend on more than one income—like buying a home and having kids. As the financial responsibilities build, there can be more at stake from the loss of a partner. The remaining partner and family could lose their home, future plans, and lifestyle during an already devastating time.
Your rates are at their lowest.
Rates for all types of life insurance increase significantly as we age, so there is no better time to buy life insurance than today. The rate you lock in today will stay with you through the length of your term life insurance policy, which could save you money in the long-run.
You’re likely in better health.
If you develop a critical or chronic illness, the cost of purchasing life insurance may become too high, and you may even become uninsurable. If you already have a life insurance policy in place when you become ill and you keep paying the premiums, you’ll be insured while the policy is active and in force, no matter how your health condition progresses during the policy term.
It’s not just for your spouse.
If you are responsible for the financial needs of anyone outside your household, you may need to provide a benefit for them as well. Don’t overlook elderly or disabled parents, nieces, and nephews, or friends who depend on your financial support.
Life insurance can serve as a form of income replacement, so if one partner is the primary earner, do both really need it? The answer may be yes. Consider each partner’s debt, financial responsibilities, and what will happen if they weren't around. This is especially important for parents. Non-working parents provide economic value that’s difficult to summarize, but the expense to provide things like childcare, cooking, cleaning, and errands should be considered.
To determine how much life insurance to purchase for each spouse, calculate the potential financial impact that a death would cause for the other. How much money would it take for each of you and your potential family to be secure? If you're not sure where to start, try our life insurance calculator.
You may not need life insurance if you have enough savings to provide for the future financial needs of your surviving spouse and anyone else you support. This type of financial stability is something that couples work toward and often aim to achieve before retirement. For some, financial success comes earlier. In this case, you are “self-insured” and your loved ones aren’t at risk of financial devastation upon your death.
Your employer may offer life insurance as part of their benefits package, but it isn’t usually enough to cover major expenses. Most employer-sponsored policies cover 1-2 times your annual salary, but many financial experts recommend about 10 times that. Employer-sponsored life insurance also terminates if you leave the company, leaving you without coverage. If you have employer-sponsored life insurance, consider purchasing an additional policy to further cover you and your dependents’ needs.