Need Help Understanding Insurance Terms?
You’ve booked the caterer. You found the right venue. You even took our advice and purchased a wedding insurance policy. You’re nearing the final stretch, but as you review the finances, you realize that if something were to happen to either you or your spouse and you lost one or both of your incomes, you’d be in serious trouble. How would I pay for this wedding expense? What about our college debt? Car loans? And most importantly, would I want/need to make sure my income could be replaced if something happened to me? I’m getting married. Do I need life insurance?
Let’s look into some of the reasons you may want to buy life insurance as you get married and begin your life with your spouse.
Buy Life Insurance If You Have Debt
This is one of the biggest reasons to buy life insurance, and it’s fairly self-explanatory. As mentioned above, how do you pay for your past and future large purchases if something happens to your income? Do you want your spouse to be stuck with paying for the house on their own, or face the possibility of needing to sell the house early? Did anyone cosign your student loans, and do you want them to be saddled with paying those off on their own? It’s a tough position for anyone to end up in, particularly if you have children. Thankfully, it is preventable. And speaking of kids…
Buy Life Insurance If You Have Or Are Planning To Have Kids
It’s difficult to think about, but what would happen if you were to die while the kids were in school? Who would take care of them? How would it work? What would the extra costs be? Do you want your spouse – and your kids to continue to live the same lifestyle they did while you were alive, or will they need to sacrifice summer camps, sports and other activities to care for the family?
Kids are expensive, that’s no secret. But this is what life insurance is all about – to protect the family if something like this were to happen.
Keep in mind – it’s equally important to buy policies for both parents, even if one is a stay-at-home parent. Think about it – if the parent that stays home passes away, who watches the kids now? Is daycare an option or a necessity? Depending on where you live, the costs of childcare can be tremendous, so plan accordingly.
Buy Life Insurance To Replace Your Income
This more or less encapsulates the majority of reasons to buy life insurance, really. The best way to plan for this is to simply replace what would be missing if you were gone to protect your family. Whether it’s protecting your kids, or keeping the ones you love from debt problems, or any other expenses you face together, this is the true purpose of life insurance.
How Much Life Insurance Do I Need
This answer is going to vary greatly based on your situation, so before making any suggestions, I highly recommend having a conversation with your licensed insurance agent to determine how much you truly need. However, a general rule of thumb is to multiply your annual income by 10, add your fixed expenses that you know will be there for the long term, and subtract any investments or non-retirement savings that would be meant to cover those expenses in your absence.
But really, talk to your agent.