Questions Newlyweds Have About Life Insurance

Talk to one of our experienced advisors, today!

10 Minute read

Originally published: July 14, 2023

glioblastoma Life Insurance in Canada

Talk to one of our experienced advisors today!

10 Minute read
Originally published: July 14, 2023

glioblastoma Life Insurance in Canada

You might not have given much thought to life insurance when you were single, but once you tie the knot, it becomes an important consideration. You now have to consider two people and, most likely, two incomes in every major purchase you make, such as a house, car, or children. How can you help those you leave behind in the event of your death? 

In this blog, we delve into the often overlooked questions about life insurance for newlyweds. Whether it’s about determining the right type of insurance, or the appropriate coverage amount, we’ve got you covered. So, sit back, grab a cup of coffee, and let’s explore the realm of life insurance.

How Much Insurance Does a Couple Need?

A few important factors will determine how much life insurance you need for your newlywed life. For starters consider the following: 

Firstly, consider your financial obligations. What obligations and debts would each of you leave for your partner if one of you passed away? The first step in determining how much life insurance you need is to make sure those costs and commitments are covered. A mortgage, car payments, credit card debt, college loans, and other personal bills can be on your list.

You should then consider the amount of money your spouse depends on you to bring home each year. If you pass away, will that income need to be replaced? This evaluation must be done by both partners before purchasing individual plans to safeguard one another. Along with monthly, annual, and incidental financial occurrences, your calculations should take into account your regular spendings.

Another thing to consider is using your life insurance to make future plans. You and your spouse should take into account any present or potential dependent expenses (such as children, elderly parents) and any retirement savings you might lose out on in the event of your spouse’s passing.

Here is a list of a few things to think about:

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The amount of life insurance you require is determined by your individual circumstances. Consider your financial condition as a couple when determining the appropriate amount of life insurance for your specific needs. Here are a few things to think about:

  • Debt – Any outstanding debt, including credit cards, vehicle loans, student loans, and lines of credit. If you want to take on debt in the near future, you should consider including this as well.
  • Income Replacement – Consider your present household income as income replacement. If you have young children, they may require more assistance.
  • Future goals and needs – Try to consider your family’s future needs. Would your children require financial assistance for their education? 
  • Mortgage – If you have a mortgage, consider how much you still owe and how much that will cost you.
  • Existing Life Insurance – Include this in your calculations since it will minimize the amount of additional life insurance you require.
  • Dependents/children –  Include the services you provide for the family, such as cleaning and caring for your children, and other dependents.

When is the Best Time for Married Couples and Newlyweds to Get Life Insurance?

The best time to purchase life insurance is determined by the circumstances of each marriage. However, your age makes purchasing life insurance sooner a more appealing choice. Purchasing life insurance when you are younger can be less expensive.

The chance of dying and diseases rises with age, and premiums reflect this by being greater. Life insurance coverage can support your partner’s financial security. If you put off getting life insurance, your loved ones may not be financially secured if you die.

What Life Insurance Should Newlyweds Consider?

Your budget and the degree of your coverage needs will determine the kind of life insurance you need as a newlywed. You might just need funeral insurance to pay for funeral fees, if your partner passes away. However, you could also need more complex financial planning in cases where you have a mortgage, or dependents. 

To meet your specific needs, you and your spouse can select from a wide variety of life insurance products that are offered by various insurance companies. Most, though, fall within the categories of term or permanent life insurance.

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Term life insurance is an affordable life insurance plan that gives you financial protection for a certain period of time. You have a choice of 10, 15, 20 or 30 years for the duration of your term insurance coverage. Your beneficiaries will receive a lump sum, tax-free payout (referred to as the death benefit), in the event that you pass away while your policy is still in effect. They are free to spend this money as they wish. Here are some of the benefits of term life insurance:

  • Fixed premiums throughout the policy period.
  • Choice to switch at any time to permanent life insurance.
  • Most term insurance policies provide immediate temporary coverage.
  • A death benefit or guaranteed tax-free payment that never changes.

Permanent life insurance is a type of life insurance policy that provides coverage for your entire life and never expires. Permanent life insurance policies are classified into three types: whole life insurance, universal life insurance, and participating life insurance. All of these permanent plans include a death benefit, which is a tax-free payment made to your beneficiaries after you die. Here are some of the benefits of permanent life insurance:

  • Tax-free death benefit
  • Cash value
  • Lifetime coverage 
  • Fixed premiums

Is Life Insurance Necessary for Individuals Without Children?

Whether you need life insurance or not is a personal decision that depends on your financial situation. As we mentioned in this blog, there are various reasons couples consider purchasing life insurance that don’t just depend on having children. Consider the following when deciding whether you need life insurance without children:

You have a mortgage: if you have a mortgage  would you be able to cover it and still afford your current lifestyle if one of you were to unexpectedly pass? 

You are a business owner: If you own a business, especially if you have partners in that business, you may require life insurance even if you don’t have children, a spouse, or a home.

Consider that you and your business partner are the owners of a million dollar company. You can individually get a life insurance policy with a $500,000 payoff for you and your business partner. If your partner passes away, you will have enough money to purchase their share of the company from the people who would otherwise receive it as part of their inheritance. These insurance policies shield the company from damaging legal issues.

Additionally, business owners may decide to purchase life insurance for key employees. It can make sense to obtain life insurance for an employee whose value to the company is such that their untimely death would endanger the operation of the company. In this scenario, the insurance policy would benefit the company. In this manner, if the employee passes away, the company will be able to continue operating while you look for a replacement.

You aim to secure your insurability: Insurance presents a paradoxical situation: it is easily accessible and affordable when it is not immediately necessary, but becomes costly or unattainable when it is most needed.

If you are in good health and young, insurance companies will typically provide you with insurance policies at a lower cost and easily approve your application, as long as you do not smoke or have any significant health issues

Life insurance becomes essential when you reach a certain age, get married, have children, and potentially have a parent who relies on your financial support. What is the issue? Obtaining approval for a life insurance policy can become more challenging, particularly if one has experienced any health concerns, which tend to become more common as we age.

How Big Should the Benefit Be?

The standard recommendation for getting life insurance is to buy a policy with a face value that is five to ten times the insured’s yearly pay (or, for a married couple, the multiplier of their joint annual salaries).

People in their thirties often purchase a $500,000 life insurance policy. Each couple’s financial situation is unique, so there is no single formula for determining how much life insurance they need. There is no one size fits all policy for life insurance for married people.

Make a list of the things you value most, such as your home, company, family, and the ability to send your children to college. And how long will this continue? Then, think about what you can do and how much it will cost.

When deciding how much life insurance to obtain, it’s important to think about how much money your family would lose if either you or your spouse died, how many dependents you have, and whether or not you plan to buy a house or other large asset as a couple. Another important consideration is all the services you provide for the family, such as cleaning and caring for your children.

Frequently Asked Questions (FAQs) about Life insurance for Newlyweds

The amount of life insurance coverage you need depends on various factors like income, debts, lifestyle, and future plans. A common rule of thumb is to have coverage that’s 5 to 10 times your annual salary. However, every couple’s situation is unique, and you should consider consulting with a financial advisor to determine an appropriate amount.

Yes, some insurance companies offer joint life insurance policies, often referred to as first-to-die or second-to-die policies. The policy pays out upon the death of the first partner in a first-to-die policy, while a second-to-die policy pays out upon the death of the second partner. The choice between these options depends on your specific financial planning needs.

Yes, a pre-existing health condition can affect life insurance premiums and the ability to get coverage. The specifics will depend on the nature and severity of the condition. It’s essential to disclose all health information when applying for coverage to avoid potential issues with claim payout in the future.

The death benefit from a life insurance policy can be used to settle financial obligations. If the debts are owned jointly, the surviving spouse will usually be responsible for paying them. Life insurance can relieve the financial stress on the surviving partner.

Yes, you can adjust your life insurance coverage over time as your needs change. For example, you may want to increase your coverage if you have children or purchase a home. It’s a good idea to review your policy periodically or when significant life events occur to ensure it still meets your needs.

Depending on your financial situation, such as the number of people who depend on you or the size of your debts, the life insurance policy your employer offers may not be sufficient. Keep in mind that once you quit your employment, you may no longer be covered by your employer’s insurance.

Find a solution for what you’re looking for

While you should certainly take the time to celebrate this momentous occasion, you should also take the time to get your financial affairs in order At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We’ve been providing expert life insurance solutions since 2007, including no medical life insurance, term life insurance, and permanent life insurance, to build the best package to give you the protection you need. 

Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today. We’re proudly based out of Hamilton, and service clients anywhere in Ontario, Alberta and British Columbia; including areas such as Toronto, Edmonton, and Airdrie.

Talk to an advisor today.

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