You know the old playground song: First comes love, then comes marriage, then comes a comprehensive financial plan for the future that includes an affordable term life insurance policy.
Okay, maybe that’s not how it goes, but it should. Kids these days, right?
People use the birth of a baby as the benchmark to finally buy life insurance. While that’s a pretty solid way to go about it, there’s one life event that could make an even better checkpoint: marriage.
Marriage is the perfect time to start shopping for life insurance because it’s when you start sharing your life – and your debt – with the one you love. Here’s why life insurance for married couples should go hand in hand with saying, "I do."
It’s better to get started earlier
While planning your future is more or less a choose your own adventure scenario in which you can do many things in many different orders, broadly speaking, people get married before they buy a house or start having kids. That makes it the perfect time to start your financial safety net and start planning for the future.
The earlier you buy life insurance, the more affordable it is. Life insurance premiums increase with age, so you’ll only be adding to your monthly rates if you wait. Rates are locked in when your policy goes in-force, meaning that you’ll pay the same each month for the life of the policy. Say you get married when you’re 30; at that age, a healthy non-smoking male can get $500,000 of coverage for a 30-year term at about $33 a month.
Meanwhile, for the same policy, he would pay around $38 a month if he waited until he was 35 – or about $55 a month if he waited until he was 40. Over 30 years, that really adds up. If marriage is the first item checked off of your adulting list, it makes sense to buy life insurance, too.
You also typically have fewer financial obligations the younger you are. If you wait to have a kid, you have those costs to deal with (and kids can be expensive) on top of life insurance premiums. Plus, maybe you upgraded to a home or a bigger vehicle to handle your bundle of joy; those are just more added expenses. By getting started on life insurance sooner, it’s more affordable and you have more time to build it into your budget.
You’re planning for the future
A strong financial future starts with a strong foundation. You’ll have a lot of things to consider going forward – how much you can afford to pay for a house, how you’ll be able to budget for the number of children you and your spouse want to have, how you’ll save for retirement – and every one of them can be derailed with an untimely death. Life insurance takes that worry off the table, and is a great start to showing you care about your family’s future.
Life insurance is an affordable way to start planning for the future. There’s nothing harder than the first step when it comes to forming good habits, and by setting your family up with a financial product that will be there for decades to come, it’s an easy way to get on the road to other habits. If you can train yourself to put aside money for life insurance each month, it becomes easier to look at other forward-thinking financial plans, like saving for a home down payment (or any big purchase), starting a 529 savings plan for future college expenses, or contributing to a retirement account. Plus, that term life insurance policy protects all of those other financial plans.
Getting started early with life insurance shows that you’re serious about getting your financial house in order, and it can save a lot of headaches and arguments between you and your spouse going forward.
You’re sharing debt
"What’s yours is mine" is never truer for married couples than it is when it’s concerning their debt.
You or your now-spouse can bring all sorts of debt to the table. Maybe that pesky student loan debt is still tagging along. Maybe you’ve gotten an early start on homeownership and now you’ve got a mortgage. Or maybe you both just rack up credit card debt pretty quickly (but are working on paying it off, obviously).
The point is, your family can be on the hook for a lot of different things. Depending on what type of student loan you have (private or federal), private lenders can go after your co-signer or your estate to recoup losses if you die. Property (whether it’s a home or a vehicle) can be repossessed. Co-signers on credit cards are responsible for unpaid balances, and even authorized users can see a hit to their credit score if the debt isn’t paid, even if they aren’t technically responsible for paying it.
While life insurance is important to ensure that your family is set up for the future, it should also be used to make sure the past won’t come back to haunt your survivors. Not all debt can or will be passed on to your family, but if any is, you want them to be able to pay it off.
Life insurance for married couples
Okay, so you need life insurance. Or maybe it’s your spouse who needs it, and you’re just being a dutiful partner and helping out with some of the research. But do both of you need it?
Maybe, and you have a few options here.
First, though, you’ll need to decide if you both actually need term life insurance. Life insurance acts as income replacement, so you want that to be the focus: Figure out the expenses you need to cover, the income you’ll need to replace, and decide what policy (or policies) will help you do so.
But don’t discount the value of a stay-at-home spouse. Even though you primarily want to replace lost income, think about what expenses losing a stay-at-home spouse would add. They cook, clean, take care of the kids (or will, eventually), and more. If you need to, for example, start paying a live-in nanny to take care of kids so you can continue working, you’ll want that cost included in your life insurance needs, and one way to do that is to get a life insurance policy for the stay-at-home spouse, too. Stay-at-home spouses can typically get a policy that matches the coverage of the breadwinner, effectively doubling your family’s protection.
The three main ways you can buy a life insurance policy for your spouse: a joint life policy, a rider to your own policy, or individual policies.
A joint life insurance policy is just what it sounds like. You have a single policy that covers both of you. This can sometimes be cheaper than buying two individual policies, but that’s honestly where the benefits end (and even then, it’s not always the case that it’ll be cheaper). It’s more confusing than individual policies when you take into account whether it’s a first-to-die policy or a second-to-die policy – basically if the death benefit is paid out after one person dies, or not until both people die – and it can get messy when you factor in the possibility of divorce. Plus, most joint life insurance policies are permanent policies, rather than term; we typically don’t suggest permanent policies, so that’s a knock against joint policies.
You can also opt for adding a spousal rider to your own life insurance policy. Again, this is a valid alternative to an individual policy for your spouse, but it can get confusing. Sometimes a spousal rider will let you add a term policy on top of yours that expires when yours does; others will allow the spouse to buy his or her own policy without needing to go through the whole underwriting process, but only after the original policyholder dies. There are a lot of caveats with a spousal rider (not to mention potential added costs for the rider itself), so make sure you talk to a licensed expert if you’re considering this path.
In the end, you’re probably better off buying a separate individual term life insurance policy for both people in the relationship. Disentangling the policies make them much simpler to sort out if either of them ever has to be used. Each person has their own policy and their own death benefit, and having the payout be straightforward is a huge boon. If he or she is time-crunched, you can even do a lot of the legwork of applying for them.
Getting married is the start of a brand new chapter in your life. But that doesn’t mean you should ignore what came before or put off what’s coming soon. By buying life insurance when you get married, you’ll have an affordable bedrock for your financial future – and your marriage.