Should Newlywed Couples Get Life Insurance?

Why Should Newlyweds Buy Life Insurance?

Life insurance premiums are cheaper the younger you are, since you're less likely to develop life-shortening health problems. But do you really need the added expense? Here are some scenarios when it can make sense to buy a policy—or not.

When Newlyweds Might Need Life Insurance:

• You have debt. Some couples share responsibility for debts from having joint accounts or living in a community property state. Unexpectedly losing an income can leave a surviving spouse unable to cover debt payments, such as car and student loans, a mortgage and credit cards. A life insurance payout can ensure debts are paid.
• You want end-of-life expenses covered. An unexpected death could leave the surviving spouse facing medical bills, funeral costs, legal fees and more. In 2023, the National Funeral Directors Association reported the median cost of a funeral with a viewing and burial topped $8,000, or around $10,000 with a vault. A cremation funeral exceeds $6,000. And neither price includes additional expenses like grave markers, internment, an obituary or flowers. Life insurance can cover these costs to prevent the surviving spouse from draining savings or acquiring debt.
• You want to leave financial security. Losing a spouse's financial support—especially the primary earner's—can leave someone with more bills than they can handle solo. Life insurance offers a safety net for surviving spouses to make ends meet.
• You have kids or plan to. Raising kids is expensive, so life insurance can be a form of estate planning to support the surviving spouse's future ability to care for your children.

When Newlyweds Might Not Need Life Insurance

• You have sufficient workplace coverage. Some employers offer free or low-cost life insurance as a benefit, sometimes with the option to pay for higher coverage. If you and your spouse already have enough coverage from an employer policy, it may be unnecessary to buy a separate policy. But employer life insurance policies typically offer minimal coverage, and they end when you leave the job, so you may want to supplement with another policy.
• You're comfortable financially. If you and your spouse already have solid savings, healthy incomes and minimal debt, and you wouldn't need a cushion to cover a funeral and expenses after one of you dies, the cost of a policy may not be necessary.

Life Insurance Options for Newlyweds

There are multiple types of life insurance policies, and it's important to select the right one for your situation so you don't spend more than necessary.

Individual vs. Joint Policies

Adults can buy individual life insurance, but married couples can also opt for a joint policy. Joint policies cover you both, usually for less than buying two individual policies. It's often used if one partner can't qualify for their own policy due to health issues, or for couples with kids who use it for estate planning.

One form of joint policy, first-to-die, pays out when the first spouse dies. The surviving spouse receives the death benefit and the policy ends, so it's ideal if one of you would need financial assistance with expenses or raising kids.

Another option is second-to-die, which is more for estate planning since it doesn't pay out until both policyholders have died. If one spouse dies first, the other doesn't get a death benefit and keeps paying premiums. Once they pass, the entire death benefit goes to their heirs tax-free.

Term vs. Whole Policies

Life insurance comes in two main categories, term and whole life, and their costs and death benefits vary greatly.

Term life insurance is more affordable since it's temporary coverage for a set time, often 10 to 30 years (sometimes longer or shorter). You pay premiums for that duration, which typically never change. If the term ends with you alive, the policy ends without payout. There's also no cash value. Once the term ends, you'll lack coverage unless you renew or buy another policy. However, some insurers offer term policies with premiums that increase over time in exchange for the ability to convert it to permanent coverage.

Whole life insurance is permanent, lasting until death (or age 99 depending on the insurer) as long as you continue paying. Premiums never rise, but they're usually pricier than term policies. Unlike term, whole life policies have cash value that slowly grows tax-free over time like a savings account. After it's grown enough, you can borrow or withdraw funds, but this reduces the death benefit.

Universal life insurance is another type of permanent insurance, which has more flexibility due to adjustable premium payments. However, these don't always build cash value, cost more than term policies and can be complicated, so they're not ideal for everyone.

Where to Find Coverage

Most major insurance companies that provide policies for home insurance, renters insurance and auto insurance also offer life insurance. If you're happy with your current insurer, the easiest step is to get a quote from them.

While they may offer discounts to existing customers, don't assume they'll have the best rates. You can often save money just by comparison-shopping, and it's free to get quotes from other insurers. Spend some time obtaining quotes from a handful of different insurers, or insurance aggregation sites, to compare policies and find the best deal.

How Much Life Insurance Should a Married Couple Have?

Once you've determined what type of policy is best for you, you have another decision: how much life insurance you need.

Some experts recommend buying a policy worth 20 to 30 times your salary. So someone with a $50,000 annual salary would take out a policy between $1 million and $1.5 million.

But this rule of thumb doesn't apply to everyone, so carefully weigh if this amount is more or less than what your family would need. Don't forget to consider what other after-tax assets you or your spouse would receive if the other died; for example, Social Security benefits, savings, investments or retirement accounts.

Another factor in how much life insurance you need is what expenses you want the death benefit to cover. Is it just for covering funeral expenses, or do you have a significant amount of debt you want it to pay off? Are you going to be child-free, or will you have kids and want this to pay for their weddings or college? The goal is to assess you and your spouse's realistic needs for peace of mind and future financial protection, while not overly straining your current budget.

How to Save Money on Life Insurance for Newlyweds

Getting life insurance does mean adding another monthly bill, but there are ways to save money on a policy:

• Bundle up. Most insurers offer discounts for customers with multiple policies. If you already have insurance with a major carrier—whether auto, home or renters—check if you can score savings by bundling life insurance.
• Try a joint policy. Joint life insurance is typically more affordable than two individual policies, so check rates for this type of policy if you both want coverage.
• Don't over-cover. It's tempting to go for a massive policy to protect your loved ones, but the higher the death benefit, the higher your premiums. Avoid taking out more coverage than truly needed so premiums don't cut into other priorities, like building an emergency fund or tackling debt.
• Consider term coverage. Whole life policies usually have higher premiums, so if money is tight, consider starting with a term policy now, then buying a whole life policy later (while keeping in mind that premiums increase with age).
• Know cost-raising factors. Understanding what impacts premium rates can help you lower costs or decide if one or both of you can afford coverage. For example, rates for younger people and women are lower, and those with health issues or family history of health problems often face higher premiums. Tobacco users pay more, as do those in riskier professions.

The Bottom Line

Not every newlywed couple needs life insurance or can afford premiums yet, and that's OK. What's important is that you're familiar with how it works and when you might need it, and you're prepared to buy a life insurance policy if and when the time is right. It's not easy to think about death when you're just beginning your life together, but similar to building credit, getting on board with life insurance when you're young can save you money and stress down the road.