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Love, not life insurance, is in the air

By Maryalene LaPonsie on November 24th, 2013

The next few months will be primetime for marriage proposals, and the National Association of Insurance Commissioners is reminding newly engaged couples not to forget to talk about less glamorous topics such as life insurance.

To that end, the association has published an Insurance Survival Guide for Newlyweds and created an interactive game dubbed I Do Adventures. Both come on the heels of a survey commissioned by the NAIC that found a serious disconnect between what young couples know they should do to financially prepare for marriage and what they actually do.

Life insurance beneficiaries neglected

The NAIC guide and game address issues related to a number of insurance topics including auto, health and life.

In regards to life insurance, commissioners say naming a policy beneficiary is an important task that should be on every couple's to-do list. However, while 62 percent of engaged or newly married 25-34 year olds acknowledge the importance of having the correct beneficiary, less than half have even had a discussion about whether their life insurance coverage is adequate.

Among more mature newlyweds - those age 55 and older - more had discussed their entertainment budget with their new spouse than their life insurance coverage. According to the NAIC survey, half of newly married couples in this age bracket had discussed entertainment spending compared to 40 percent who had a talk about their life insurance.

Term life can be affordable option for newlyweds

Marriage can mean life insurance needs change dramatically. While single individuals may only need enough coverage to pay for their final expenses plus leave an inheritance or a bequest to a charity should they so choose, married couples have other obligations. The NAIC suggests newlyweds consider the following when deciding how much coverage to purchase.

  • Future income potential
  • Cost of raising children
  • Outstanding mortgage payments

With money tight for many young couples, term life can be a low cost way to get the necessary amount of coverage. Whole life policies have an investment component and build cash value. While a convenient way to increase net worth, the monthly premiums are significantly higher than term life which offers no-frills coverage for a set period of time.

Term policies offer affordable life insurance coverage that can cost as little as $20 a month for plan offering a death benefit worth several hundred thousand dollars. Actual premiums depend on age and health status. To get the best deal, couples should compare life insurance quotes from several different companies before buying a policy.

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