Why Is Life Insurance Important When You Are Married?
When you get married, your life is in for a lot of big changes. And that includes financial changes. You now have your financial life in common with your spouse, and the money decisions you both make affect each other. Taking out life insurance may not seem like a necessary step right away, but it can be smart to consider it.
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Maintaining Your Lifestyle
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You probably don't think of your spouse as a dependent, especially if you both work. But the financial life you're building together probably takes the earning power of both of you to make it function. Think about your spouse's situation if your income was suddenly not there. He would likely have a difficult time meeting all of the obligations you currently have.
Planning For the Future
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If you're thinking about kids, it's especially important to have life insurance in place. Many insurers won't begin coverage on a pregnant woman, but will want to wait until the pregnancy, with its potential complications, is over and the child is born. It can give you peace of mind at a time of great change if your new family's financial future is provided for ahead of time.
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Begin Young
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It can make a lot of financial sense to begin coverage when you're young. You will get a much better rate on term life insurance if you take it out while you're young and healthy. If you take out a 30-year policy at the age of 25, you'll pay less than half the premium of a 45-year-old taking out the same coverage. Also, you have no way of knowing if in the future you may develop a medical condition that would make you uninsurable.
What Type of Insurance
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There are two types of insurance. A term policy covers you for a set period of time, and pays out only in the event of your death. These usually cannot be renewed after age 75. A permanent policy will protect you for your whole life if you so choose, and builds cash value. The main consideration if you're young and newly married may be the cost of the premiums--term life insurance is significantly cheaper than permanent insurance. In fact, the premiums for permanent life can be five times that for a basic term policy.
Level of Coverage
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The level of coverage will depend on your financial circumstances and needs. Think about the demands of your current lifestyle, and how much your spouse would need to pay off debts, cover funeral and medical expenses and then maintain herself comfortably. This can be a good question to pose to a licensed agent who's familiar with life insurance products, and who can help you take a detailed look at your obligations. To get a rough idea, you can use an online calculator--see the link in the resources section.
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References
Resources
- Photo Credit arms of married couple image by Denis Babenko from Fotolia.com
