Do Couples Need Life Insurance

During the month of February, couples traditionally take time to celebrate their love for each other. And if you have someone you want to spend the rest of your life with, February is often the month to make that commitment. This is why so many of us look forward to Valentine’s Day each year.

When you are engaged and eventually marry, you have great plans for the future; get a better job, buy a house, start a family, save for retirement, etc. And while it is great to plan for the future, many couples forget to make contingency plans for a worst case scenario. This is where life insurance comes in.

How Much Life Insurance is Necessary: The amount of life insurance you need depends heavily on your specific circumstances. In general, the more obligations you have the higher the level of necessary coverage. Here are some areas to consider when shopping for life insurance:

Burial: No matter what other obligations you have, everyone needs to leave at least enough money behind to pay for a funeral and burial. Even if you decide on cremation, you should still plan on a minimum of $5,000 for this expense. For a full casket and burial, this figure will be more in the $10,000 to $15,000 range.

Income Replacement: You want to make sure you have enough in life insurance to replace your income for a set period of time. Of course, you cannot replace your income forever, but it should be at least long enough for your spouse and children to maintain the same (or similar) standard of living as you have today.

A good rule of thumb is to multiply your annual income (after taxes because insurance death benefits are tax-free) by the number of years before your youngest child reaches age 18. For example, if you have three children ages 8, 5, and 3, you will want to provide enough coverage to replace your income for the next 15 years, so your three-year old will be taken care of into adulthood.

Debt Elimination: Debt is another area you want to be able to fully address if something were to happen to you. Your life insurance policy should have sufficient coverage to pay off your mortgage, auto loans, credit cards and other debts, so your family will not be burdened with them when you are gone.

College for Children: Along with taking care of your children until age 18, many parents also want to ensure they have enough coverage to (at least partially) provide for college. Private schools are extremely expensive, but public universities are significantly less. One possible strategy is to provide enough coverage to pay in-state tuition to a public university for four years, thus ensuring that your children will at least have that option when it comes time to pursue higher education.

Speak with an Expert: There are several other specifics that should be discussed before deciding on the right life insurance policy for you, your spouse and family. For example, should you buy term life insurance or whole life? And if you choose term, how many years should it be in effect? The best approach is to speak with a life insurance agent that is not “captive” to any particular insurance carrier. An independent agent can freely consult with you and shop among several of the top insurers in your state to find the policy that best fits your needs and budget.