Newlyweds, Do you Need Life Insurance?
Whilst life insurance might not be first and foremost in your mind when you’ve just got married, it is important to look ahead to the future. Having made a commitment to “until death do us part” the chances are you’re planning to be together for the long haul and will be setting up home, maybe even starting a family. Taking the required steps to buy life insurance may not be the worst idea
Whilst is may not seem romantic, it is a good idea to figure out between you what would happen if the worst was to happen and one of you was to die. This is particularly important if the remaining one of you would not be able to support themselves financially in your home or if you have other dependants such as children.
Putting financial arrangements in place sooner rather than later can give you both peace of mind and alleviate worry. There are a number of ways that you can do this. If you have a personal pension then this may make some provision for your spouse in the event of your death. You may also wish to consider setting up a specific savings or investment fund if you have sufficient disposable income and have the will power not to touch the money for any other purpose. Alternatively you may find that a life insurance policy is the most appropriate way to make financial provisions.
A life insurance policy pays out a lump sum if you die within the term of the policy. There are several different types of policy. Whole of life cover is the most expensive and, so long as you maintain the premium payments, will continue to cover you for the rest of your life.
Term assurance policies are cheaper and run for a set period of time, for example, 15 years. If you should die within this period then the policy pays out a pre-agreed lump sum, if you die after the policy has expired then nothing is paid.
Decreasing term assurance policies are popular with those concerned with safeguarding the family home. These policies are similar to term assurance policies, however, the lump sum payable decreases over time in line with your outstanding mortgage balance.
Of course, it is important to compare different products offered by different insurers to make sure that you get the most appropriate cover at the best premium. As well as comparing the features between different types of cover you will also need to decide whether to buy a joint policy or two single ones. Whilst a joint policy is usually cheaper this is because it will only pay out once when the first person dies. The surviving partner would no longer be covered once the policy had paid out and would, therefore, be uninsured. This may not appeal if you have other dependants such as children.
Whilst thinking about death when you’re a newlywed may seem a little morbid, it is important to make sure that you have planned appropriately for the future. By spending a little time at the beginning sorting out your financial arrangements you’ll be able to get on with enjoying married life with less to worry about.
Lloyd is currently working on behalf of SO Switch, a premier online destination for insurance comparison.