Life Insurance for Newly Weds

The perfect time to protect your future

In all the excitement of getting engaged or married, Life Insurance is probably one of the last things on your mind. After all, no-one likes to think about the bad things that can happen, especially at a time like this. In reality, though, now is the perfect time to consider Life Insurance – especially if you have plans to buy a new home or start a family. The fact is that sometimes misfortunes do befall us, and it makes sense to help make sure your loved ones are fully protected, should the worst happen.

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For many people let alone those planning a wedding, the very words ‘Life Insurance’ bring a feeling of confusion – there are so many things to consider it can be hard to know where to start. Don’t worry – it’s simpler than you think. Here, we’ll guide you through the key issues in straightforward language, to help you decide what you should do. In particular, we’ll look at the following commonly asked questions:

Why is getting married a good time to look at Life Insurance?

Whether you’re in a long term relationship, newly married or somewhere in between, it would be a good idea to consider financial issues such as:

  • If, like many couples, you intend to start a family, could you afford to look after your children if something happened to your partner? Child care is expensive.
  • If you buy a house after getting married, could your partner afford the mortgage repayments if something happens to you?
  • If you already have individual Life Insurance policies, they may no longer cover your joint needs. It may be more cost-effective to look at a joint policy.
  • If you still have a joint policy with an ex-partner, or they’re named as a beneficiary on an existing policy, this is a good opportunity to cancel old arrangements and start afresh with your new partner.
  • For many people, arranging Life Insurance goes alongside writing a Will – so it makes sense to do both at the same time, when you’re newly married (Will writing is free with Beagle Street Life Insurance policies).

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Benefits of Beagle Street

Trust Tool
FREE tool to place your policy in Trust.

Terminal Illness Cover
Terminal Illness cover included as standard.

Accidental Death Benefit
if you don’t get an immediate decision on your policy.

Online Account
Online access to your account, so your policy documents are never lost.

The benefits of Life Insurance for newlyweds

Having appropriate Life Insurance brings many benefits. The cost of premiums can be tailored to your budget and needs, and it can give you the peace of mind knowing that your loved ones are financially secure should anything happen to you. For example:

  • Your partner won’t have to worry about money during an already difficult time.
  • Life Insurance pay-outs can be spent any way you wish, so they can pay off any loans and debts you may have.
  • Your children, or other financial dependents, will be looked after if you’re no longer there to provide.
  • Typically, the younger you are when you take out a policy, the cheaper it will be. This rate is then locked in for the remainder of the policy term.
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What types of Beagle Street Life Insurance policy should we consider?

Beagle Street specialise in two main types of Life Insurance policy – decreasing term and level term, both offering cover for a fixed amount of time (the ‘term’), which is fixed by the policy holder(s). If you die during this time period, a death benefit will be paid.

Level Term Life Insurance

As the name suggests, the pay-out for Level Term Life Insurance policies stays the same over the term of the policy (it doesn’t decrease). This means that the death benefit is constant. This type of policy is often used by parents to support dependents, should one or both parents pass away.

Level Term

Decreasing Term Life Insurance

This is often used to provide coverage for a financial product with a value that drops over time, such as a loan or mortgage. As the amount that has to be repaid falls with time, so the pay-out offered by the policy also decreases – hence its name. Typically this is the cheaper option for life insurance cover.

Decreasing Term

Should we have one policy between us, or separate plans?

If you’re engaged or newly married, it might seem romantic and obvious to take out a joint policy, but that’s not necessarily the case. Let’s look at the pros and cons of both approaches.

Joint policy

This type of policy can be a good choice for newlyweds who are trying to save money.

Pros

  • A joint policy is usually cheaper than taking out two individual Life Insurance policies.
  • Joint policies pay out regardless of which partner dies.

Cons

  • When one of the policyholders dies, the pay-out is made and then the policy ends (this is called a ‘first death’ basis). If the surviving partner wants to stay insured, they need to take out another policy.
  • If a relationship breaks down, there can be issues over who is entitled to any pay-out.
Joint Life Insurance

Two separate policies

The advantages of maintaining separate policies include:

Pros

  • You can insure for different amounts. Separate policies allow you to insure each person for a different amount – you can, for example, take out a higher level of insurance for the family’s highest earner.
  • In the event that your relationship breaks down, there are no worries about what happens to the policies. But if this is the case, you may want to change the trustee on your policy.

Cons

  • Single policies are usually (but not always) more expensive than joint policies.
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How much should we insure for?

Obviously, the bigger the sum you insure for, the higher your premiums. However, you also want to make sure that it’s enough to cover the needs of your surviving family. It’s hard to generalise, but you may need to consider the financial impact of either partner dying.

A reasonable guideline that you could consider is to insure for a sum in the region of ten times the income of the highest earner in the household. This may sound a lot, but it is important to make sure that you think about the outgoings you want to cover to ensure you leave enough money to cover mortgage repayments and expenses (including childcare).

In the UK, more than 100 children lose a parent every day. [1]

How to protect your Life Insurance pay-out from tax

You have the option of placing your Life Insurance policy in trust. This simply means that any pay-out worth more than £325,000 is less likely to be charged inheritance tax any payment on death will fall outside of your estate for inheritance tax purposes. It also means that the executors of your Will won’t have to apply for a grant of probate before the policy will pay out – a process that can take several months.

Beagle Street joint life insurance policies pay-out on the first person who dies and the payment will go to the remaining policyholder. If you have queries about inheritance tax you can look for independent advice which can be centered around your personal circumstances.

Joint life insurance policies covering partners on a ‘first death’ basis don’t need to be set-up in trust from a tax perspective because there is usually no inheritance tax liability when assets transfer from one spouse to another. However, a trust may be a very good idea if you hold a joint Life Insurance policy on a second life basis.

Your next decisions:

How much cover do I need?

Don’t know how much cover you need? Use our handy Life Insurance calculator for help.

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What’s different about us?

We make Life Insurance simple, find out some great reasons to buy Life Insurance with Beagle Street.

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Guides

Check out our collection of handy guide pages to help answer any further questions you may have about Life Insurance.

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Appendix

  1. Winstons Wish – The Charity For Bereaved Children