Should you update your life insurance policy when you marry?

After the party is over, and the guests have gone home, it’s time for the new bride and groom to focus on things that aren’t nearly as exciting as their wedding. Life together quickly turns back to normal.

These days, most people live together before tying the knot, so their financial lives have already started to intertwine. Many couples already have things like joint bank accounts. By the time they make it official, there isn’t much left to do.

The challenges that usually remain for newly married couples are the big picture financial stuff. Things like planning for retirement, or making sure they have an updated will. This is the stuff that doesn’t get looked at very often.

Let’s take a closer look at how a newlywed couple should look at another big picture part of their finances: life insurance.

First, assess your needs

I find, for the most part, single folks don’t get a whole lot of life insurance, primarily because they don’t need it. The whole point of life insurance is to take care of dependents after you pass away. If you have no dependents, there’s no need for life insurance.

When a couple first gets married, the first thing they should do is figure out if they need life insurance at all. In many situations, the need might not be very pressing. As long as the couple doesn’t jointly owe any major debts, minimal coverage to cover funeral expenses is probably fine. Most workplace benefit packages offer this type of benefit.

It gets more complicated if the newlyweds have a house together, or if there are children involved. In those situations, it’s usually a good idea to update your life insurance. How much you should buy depends on the situation.

How much insurance?

If you and your spouse own a property together, it’s often a good idea to get some sort of mortgage life insurance, especially if each of you can’t comfortably handle the mortgage payments on your own. The amount of insurance should be enough to pay the mortgage off completely.

The last thing you want to do is to leave your spouse in a tough spot financially. Sure, life insurance can be a little pricey, but if you can’t afford the premiums for a sensible insurance policy, then maybe that particular home isn’t for you.

Children are a little different. One school of thought is you want to make sure there’s enough insurance coverage to completely replace one spouse’s income. This could easily mean a couple million dollars in coverage – or more.

But perhaps that’s too much. It really depends on each couple’s situation. Some might be able to easily make it on one salary if the mortgage was paid off. Or perhaps one spouse makes much more than the other, which makes it more sensible to only insure the higher-earning spouse’s life.

Even childless couples with no debt should at least reconsider their life insurance needs once they get married, and continue to have the conversation at least annually as long as they stay together. Too many people avoid the topic entirely, content to think healthy people like themselves won’t die prematurely.

Conclusion

Getting married doesn’t automatically mean a couple needs to update a life insurance policy – or even purchase it all. It all depends on the situation. There are plenty of examples of couples who don’t need a dime of life insurance. But many couples do need life insurance, especially those who have big joint liabilities.

Ultimately, it’s up to each individual couple to decide what they need. At the very least, most should be having an annual discussion about it.