Life stages series: Life insurance for newlyweds

By Maryalene LaPonsie on July 5th, 2011

newlywedsFor newlyweds, life insurance may be the last thing on their minds. However, the need for life insurance coverage should be discussed by young couples, especially as they begin to plan for the future and their financial lives become increasingly intertwined.

Do newlyweds need life insurance?

Although experts almost universally agree that couples with children should purchase life insurance to replace lost income and provide for future expenses such as college, there is disagreement regarding whether this coverage is needed for childless couples.

Kiplinger's Personal Finance suggests that newlyweds can forgo buying a life insurance policy until they become parents. However, the argument against life insurance for newlyweds assumes that both spouses are working and would be able to support themselves independently should the other die.

On the other hand, the Financial Planning Association (FPA) says life insurance is important as soon as two people become financially tied together. Marv Feldman, President and CEO of the Life and Health Insurance Foundation for Education (LIFE), agrees, saying that young couples may have financial obligations, such as education loans or credit card debt, which warrant coverage.

Before deciding to forgo life insurance, couples should consider whether the surviving spouse would be able to pay monthly bills and achieve future goals like buying a house or obtaining higher education with only one income.

Newlyweds, especially those who marry early on, should also consider purchasing life insurance when they are young and healthy. The California Society of CPAs (CalCPA) acknowledges that childless young couples may not have an immediate need for coverage, but purchasing a policy at this life stage can mean affordable life insurance rates and possibly guaranteed coverage later in life.

Life insurance tips for newlyweds

There are several methods to determine the appropriate amount of life insurance to purchase. The FPA recommends that young couples determine the amount of money needed to replace lost future income, as well as to pay off debts. Newlyweds can also use a life insurance calculator to determine the amount of coverage needed.

When it comes time to select between term life and permanent life coverage, many young couples may find that term life insurance is the more affordable option. Permanent insurance, such as whole life insurance, provides guaranteed coverage but it can be significantly more expensive.

"Couples should find out their coverage level first and then look at their cash flow," advises Feldman. "Those who can afford permanent life insurance at their coverage level should consider it as an investment."

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