Getting married may be the most significant moment of your life. It's also something that requires a lot of financial planning. Spouses often combine finances and debt and take on new expenses together, like a home mortgage and raising children. As you begin your life as a married couple, you should prepare for the unexpected situations that could affect you both. That includes considering a life insurance to protect each other and any future children.
Dealing with debt
If you have financial responsibilities like student loans, a car loan, or credit card debt, this debt may also affect your spouse as you merge your lives. Even if they’re not co-signers on loans, your spouse may still face repercussions, like the car getting repossessed or taking a hit on their credit score. 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.
Getting ahead of the future
Marriage often jumpstarts a series of large financial commitments that can depend on more than one income, like buying a home or having kids. As the debts and responsibilities build, having life insurance in place can help alleviate the financial stress that can accompany a spouse passing away.
Your rates are at their lowest
Rates for all types of life insurance increase as you age, so the lower rates you lock in today last for the length of your term. That could save you money in the long run.
Take advantage of your health
Oftentimes, the younger you are, the healthier you are. Securing your life insurance while your health is in good shape ensures lower rates and guarantees coverage for the length of your term, no matter how your health changes. Waiting until a health condition arises could make it difficult to obtain life insurance.
It’s not just for your spouse
If you're responsible for the financial needs of anyone outside your household, you may want life insurance to protect them. Don’t overlook elderly or disabled parents, relatives, 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 would happen if they weren't around. This is especially important for parents. Non-working parents provide economic value that can be difficult to quantify, but the expenses around childcare and household duties 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 to ensure the financial security of remaining family members?
Your employer may offer life insurance as part of a benefits package, but it usually isn't enough to cover major expenses. Most employer-sponsored policies equal a year or two of your annual salary, but how much life insurance does a married couple need? Many financial experts recommend having about 10 times as much insurance as an employer-sponsored plan.
Solely relying on employer-sponsored coverage may result in a coverage gap that would leave your loved ones unprotected in the event of your passing. And if you leave the company, your employer-sponsored life insurance might not stay with you. Investing in a personal term life insurance policy gives your family financial security, no matter what turns your career takes.
As the name suggests, individual policies insure a single person. Term and permanent are the two most common types of individual life insurance.
Term life insurance
Term life insurance is often the most affordable and straightforward option. Term life insurance for married couples provides coverage for a set period or “term” (typically 10–30 years). If you pass away during the term period, your beneficiaries receive a lump-sum payment referred to as the death benefit to cover expenses and income loss related to your passing. If you pass away after the term expires, no benefits are paid.
At Ethos, our goal is to insure and protect as many families as possible. Offering term life insurance lets us do so in a way that is simple and affordable, protecting families during a time when they need it most.
Permanent life insurance
Permanent insurance can be more complicated than term, and it offers different benefits. There are many types of permanent life insurance for newlyweds, but whole life is the most well-known form. It lasts for the entirety of your life and a payout is often guaranteed at the time of death. Some of the money paid into the policy is typically set aside to build cash value, which can increase the death benefit or be accessed on a tax-free basis via a policy loan. These benefits are why whole life policies can cost up to 20 times more than term policies, and why some say whole life insurance is a more conservative, long-term strategy.
Joint policies insure more than one person, typically a married couple. Explore the two most common types of joint life insurance for married couples.
If a spouse were to pass away, a first-to-die policy generally pays a benefit to the surviving spouse, and the policy terminates after the benefit is paid out. This option assumes that the surviving spouse no longer needs life insurance. Depending on many factors, first-to-die coverage may or may not be less expensive than individual life policies.
Second-to-die life insurance usually pays a benefit to the beneficiary after both insured parties pass away. This option assumes that the surviving spouse will not need a death benefit paid out in their lifetime but will have dependents in need of a death benefit.