Buying life insurance as newlyweds is a great step to take when combining your financial plans and preparing for the future. Life insurance provides a financial safety net for your spouse if you were to pass away unexpectedly, and one of you had to live without the other’s income or household contributions.
Life insurance terms newlyweds should know
Cash value
A component of a permanent life insurance policy that works like an investment or savings account. The cash value of the policy accumulates over the policyholder’s lifetime and can be withdrawn at any time, used as collateral to take out a loan, or paid out upon the policyholder’s death.
Death benefit
An untaxed lump sum that the life insurance policy pays to the beneficiary upon the policyholder’s death. The death benefit amount is considered the face value of the policy. Experts recommend a death benefit 10-15 times your income,
Beneficiary
A beneficiary is the recipient of a life insurance policy’s death benefit. This can be one person, several people, or an organization, as determined by the life insurance policyholder and is often the main reason people buy coverage. A beneficiary must file a claim to obtain the benefit.
Term life insurance
A type of life insurance that is in effect for a set number of years, usually anywhere between five to 30 years. Term life insurance is a basic policy with no additional components, such as a cash value, but it is generally the best life insurance policy option for most people due to its lower cost.
Whole life insurance
A type of life insurance that provides a permanent death benefit and has a tax-deferred savings component. Whole life insurance policies are typically five to 15 times more expensive than term life insurance policies, leading to the surrender of 45% of policies within the first ten years of being in force.
Why do young married couples need life insurance?
Life insurance can help add financial support in several different ways as you start to plan your financial future with your spouse.
Shared income and debts: Once you start co-signing loans, like a mortgage or car loan, you both become responsible for those payments. And collections agencies can come after your spouse’s assets over personal debt, like student loans. Life insurance can pay off those debts so you don’t lose your property or savings.
Protection for your future: Your life insurance coverage can be used to insure your growing financial responsibilities — such as a mortgage, childcare, your future children’s education, and taking care of your aging parents.
Buying early saves you money: Every year you delay buying a policy, your rates will increase, because we all become riskier to insure as we age.
How much life insurance do young married couples need?
A common rule of thumb is to buy around 10 times your annual income in life insurance coverage as a general estimate, but how much life insurance you need ultimately depends on your personal financial situation and goals.
The total benefit should also allow your spouse to pay off your debts and cover current and future expenses.
Spouses who don’t earn an income should still have a policy to account for loans and any household contributions that would need to be replaced in the event of their death, like cleaning or childcare.
How much does life insurance for newlyweds cost?
A 30-year-old female who doesn’t smoke and is in good health can expect to pay $408 per month for a whole life insurance policy with a $500,000 payout. A 30-year-old male with a similar profile can expect to pay $472 per month for the same coverage.
Age | Gender | Term | Term life coverage, $500K | Whole life coverage, $500K |
|---|---|---|---|---|
20 | Female | 20 years | $22.65 | $287 |
Male | 20 years | $30.20 | $334 | |
30 | Female | 20 years | $22.98 | $408 |
Male | 20 years | $29.32 | $472 | |
40 | Femal | 20 years | $35.27 | $588 |
Male | 20 years | $42.94 | $706 |
Methodology: Average monthly rates are calculated for 20, 30, and 40 year-old male and female non-smokers in a Preferred health classification buying a 20-year $500,000 term life insurance policy of 2a 0-year whole life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Brighthouse Financial, Corebridge Financial, Foresters Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and the Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies to determine pricing trends. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies areavailable in all states. Rate illustration valid as of 07/01/2024.
How much money can I save by buying a life insurance policy immediately when I get married?
Let’s take a look at an example using the table above. A $500,000 term life insurance policy lasting 20 years could cost $23 per month for a 30-year-old female, while the same coverage would cost $35 per month for a 40-year-old female with the same profile. Buying a policy while you’re younger can help you lock in lower rates for years to come. In this example, you’d end up saving upwards of $3,000 by taking out the policy at 30 years old instead of 40.
What type of life insurance do young married couples need?
You have many options to choose from when purchasing life insurance as a married couple — the two most common being term or whole life insurance.
Term life insurance
Term life insurance is one of the most straightforward and affordable types of life insurance — it’s meant to cover you during the time of your life when you have the biggest expenses, like when you have a mortgage to pay off.
Term life expires after a set number of years, which is one of the reasons it’s so affordable. For many young couples, term life is a great starting point when it comes to financial protection.
Whole life insurance
If you have a higher budget and more complex financial needs, you could look at types of permanent life insurance, like whole life. Whole life never expires and comes with a cash value component that acts as a forced savings vehicle. Unlike the standard death benefit, you can access your cash value while you’re alive.
A Policygenius agent can walk you through the different types of life insurance and help you find the one that suits you and your spouse’s needs.
Learn more >> Best life insurance for young adults
Should both newlywed partners have life insurance?
Regardless of the type of life insurance you choose, in most circumstances, it’s ideal for each partner to have their own separate life insurance policy. You might come across joint life insurance, which covers both partners under one policy. This option is typically only practical if one of you doesn’t qualify for your own individual policy, or if you’re looking for survivorship life insurance specifically to help with estate planning.
If only one of you takes out a life insurance policy, a spousal rider — an add-on to a life insurance policy that provides coverage to the insured person’s spouse — can make sense if one of you doesn’t qualify for your own policy. But that means your coverage is dependent on your spouse’s policy. Spousal riders also come with coverage limits.
What should you do if you already have life insurance and you’re married?
If you get married and you already own a life insurance policy, you can simply change your beneficiary information as needed to reflect your new spouse.
To make any changes to an existing policy — whether that’s a beneficiary, address, or method of payment — you can simply contact your insurance company. If you bought your life insurance through Policygenius, you can contact us, too. We’ll help you fill out the right paperwork to update your information.
If you already have a life insurance policy, but you need more coverage now that you’re married, you’ll likely need to buy an additional policy. This is because many insurers don’t allow you to increase coverage on an active policy without re-evaluating your profile — you might even need to take another medical exam, or answer an additional health questionnaire.
If this is your situation, you can contact a Policygenius expert for free to look at your options for adding another life insurance policy to your financial plan.
When can I list my new spouse as my beneficiary?
If you already own a life insurance policy, you can list your partner as your beneficiary at any point after — or before — you’re officially married. You’ll just need to provide their name, date of birth, and relation to you on your policy documents. If you’re applying for a new life insurance policy, you’ll provide this same information on your life insurance application instead.
