– Life Insurance for Couples –
Getting life insurance as couples can provide your family with a financial support in case of situations where anything happens to you or your spouse.
When you and your spouse are shopping for life insurance, you may want to consider a few things, including the type that’s best for you.
This article will cover everything you should know about getting Life insurance for couples, and also help you decide if you should get joint or single life insurance.
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What Is Life Insurance?
Life insurance is a contract between an insurer and a policy owner.
A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime.
For the contract to be enforceable, the life insurance application must accurately disclose the insured’s past and current health conditions and high-risk activities.
Reasons Couples Should have Life Insurance
Being in a serious relationship often means big life choices and commitments – like housing, children, and joint bank accounts.
If something happens to you, you’d want your partner to be able to manage the obligations you both agreed to take on as a couple. You might also want to plan for your future.
Either way, a life insurance policy death benefit could help with:
1. Paying Off a Mortgage
If you and your partner buy a house together, your monthly mortgage payment was probably predicated on your joint income.
If one of you dies, that income is gone, and managing a house payment alone can be a big burden on the one left behind.
A life insurance policy can help pay off a mortgage and relieve a lot of anxiety and financial stress.
2. Settling Debt
If you and your loved one have debt together, such as personal loans on a joint account, a vehicle loan, or credit card bills, the surviving half of the couple could be legally responsible for the joint debt.
A life insurance payout could help cover these bills, leaving a clean slate.
Any debts left when you die would be paid out of your estate, meaning your assets. This repayment will eat into what you pass on to your spouse.
Your spouse could also be on the hook for co-signed loans or debts in any joint accounts.
In community property states, your spouse would be responsible for personal debts you took on after getting married, such as credit card balances.
Life insurance for married couples can help cover those debts if one partner were to die.
3. Handling Final Expenses
A funeral and burial can be hard enough without the crippling cost of such events. Make financial worries the last thing your loved one has to think about if they have to face the loss of their partner.
4. Managing Living Expenses
If one of you is the main breadwinner while the other runs the house and cares for the children, the loss of either parent could be devastating.
A non-working spouse will need financial support, and a working spouse may need to come up with a way to pay someone to do all the work previously done by the non-working partner.
If you have children together, you’ll want to make sure they are well provided for in the event of your death, and even more so if you and your partner both pass away.
Depending on the age of your children, you may need a policy that would replace your and your spouse’s income until they reach their age of majority, with extra to get them started on their path in life.
5. Your Expenses May Increase as a Couple
Many couples wouldn’t be able to bear these costs on just one income.
One of the primary reasons for buying life insurance is income replacement, so that your family can continue its plans and lifestyle if a breadwinner were to die.
Best Types of Life Insurance for Couples
Once you’ve decided to buy a policy, the question becomes what kind of coverage to buy and how much life insurance you need.
Your decision generally depends on what financial obligations you want to cover, how long those obligations last and how much you want to spend.
1. Term Life Insurance
Term life insurance is suitable for many needs. It promises to pay a set amount if you die while the policy is in effect. You decide how much the payout would be and how long the life insurance should last.
You can match the length of the policy to a financial need.
For example, if you want to make sure your income is replaced for 10 years if you die, you can buy a 10-year term life policy in an amount that would match the income.
Term life is the most affordable life insurance option. However, there are different types of term life insurance:
- Annually renewable term life insurance: This type typically lasts until you cancel your policy, or until you reach a certain age. “With an annually renewable policy your premiums are based on your age and health when the policy begins, but those premiums increase over time,” says Stokes. “Annually renewable term life insurance is usually the least expensive life insurance you can buy, though it does get more expensive as you age.”
- Level term life insurance: Level term life insurance gives you more certainty over the cost of your premiums, as they remain level for the length of your policy. “Often, level term life insurance is sold in ten-year and 20-year terms,” she adds. “Once the term ends you stop paying and no longer have coverage.”
2. Permanent Life Insurance
Permanent life insurance lasts your entire life and builds cash value. It’s a good fit for people who want to provide money no matter when they die.
A permanent policy, such as whole life insurance, can be used to cover things like funeral costs or to pass on an inheritance. Also, you may be able to take a loan against the cash value while you’re still alive.
Different times of permanent life insurance include:
- Whole life insurance: This is the most straightforward form of permanent insurance, according to Stokes. You pay a fixed monthly or annual premium for a guaranteed death benefit and coverage lasts your entire life—even after you are done paying the premiums. “Your cash value is guaranteed to grow and with annual dividends, it can grow faster,” she adds.
- Universal life insurance: Universal life insurance allows you to build cash value but it provides more flexibility in the amount you pay in a premium and your death benefit. “Your cash value is not guaranteed to grow, but you do have the ability to accumulate more cash value because of the flexibility in premiums,” she says.
- Variable universal life insurance: This insurance gives you more control over your cash value by allowing you to allocate it toward a wide variety of market-driven subaccounts. “Like universal life insurance, the ability to gain more cash value exists because of the premium flexibility as well as the investment performance of the subaccounts,” Stokes says. “However, just like regular market-based investments, your cash value could also decline.”
3. Survivorship Life insurance
There are also survivorship life policies, which are a type of joint life insurance. They cover two people under one policy and are typically cheaper than buying separate policies for each person.
This type of joint coverage can be set up in one of two ways.
First-to-die life insurance: This pays out upon the death of the first person. After that, the policy ends; it does not then extend to the surviving partner. The survivor could use the money as income replacement, to pay off a mortgage balance or to cover other debts. Note that this type of life insurance may be hard to find because there are few sellers.
Second-to-die life insurance: This pays out when both partners have died. It’s generally used by wealthy couples who want to make sure heirs, such as adult children, have money to pay estate or inheritance taxes. Or it may be used to fund the care of a child living with a disability when both parents die.
4. Accidental Death Benefit
Some companies also offer the possibility of adding riders, which can increase the death benefit.
An accidental death benefit provides an extra sum of cash in case your death is caused by an accident. A waiver of benefits for disability can help ensure your premiums are paid even if you can’t work.
Before you buy, shop around and get life insurance quotes from different providers. In general, term life insurance is sufficient for most families.
Your personal life and financial situation may change over time, so having your own coverage is often the best choice.
Which Type of Policy is Best for Couples?
To determine which type of policy is best for you and your spouse, you will want to understand your circumstances and know what you both are looking for from your life insurance.
Talking with a licensed agent might be helpful. Separate life insurance policies may be best for couples who prefer more customization in their individual policies, like different policy types or different amounts of coverage.
On the other hand, if you do not have separate preferences for coverage, then obtaining a joint policy may be the most suitable for you and your spouse.
A joint policy means you’ll have just one life insurance bill to manage, rather than two. Another reason for obtaining a joint policy is if you and your spouse have one specific need, such as paying off a large debt like a home mortgage.
Can You Get Life Insurance if You’re in a Domestic Partnership?
Domestic partners may experience the same needs that married couples have when it comes to financial security.
However, not all states and life insurance companies offer domestic partnership life insurance, so you will need to do a bit of research into your state’s laws.
Additionally, if you and your domestic partner are not legally married, you may be asked for more documentation during the underwriting process, such as proof of shared expenses and dependents, to prove your domestic partnership status.
While joint life insurance might not be available for all domestic partners, depending on the state they live in and the company they choose, separate policies are available.
Individual policies aren’t tied to any kind of marital or partnership status. Domestic partners may be able to obtain an individual life insurance policy to help provide financial support to their partner after death.
Cost of Life Insurance
Life insurance can be paid both monthly or annually and the price mostly depends on the policy type and coverage amount. Other factors that help determine the price of your policy include your age, health, and gender.
Term life insurance policies could be as little as $20 a month while more comprehensive, permanent options are generally a bit more according to Lepore.
“Term policies offer a predetermined amount that is paid out if the policyholder passes during the policy period,” she explains.
“Whole life policies are active for your whole life and usually have something called cash accumulation, meaning it accumulates money from your payments that you could borrow from at a later time if needed.”
When to Purchase Life Insurance
According to experts, even if you and your partner are young and healthy, the earlier you start thinking about getting life insurance the better. Plus, life is completely unpredictable.
And you want to be certain that a medical incident won’t prevent you from getting coverage in the future.
Additionally, most insurers allow you to add a benefit at younger ages that gives you the right to buy more insurance without having to take an additional health exam later.
Locking in your health status is a key reason to buy life insurance while you are young.
And the earlier you begin talking about it during your engagement or first years of marriage, the more comfortable you will feel making this important decision.
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How Much Life Insurance to Purchase
The death benefit amount that young couples “need” varies depending on their personal situations.
“You want to come up with a number that takes into consideration your salary, assets, and any debts you have (like credit cards, student loans, or a mortgage) as well as how much it costs for you to continue living your same lifestyle.
People take out policies for many different reasons and over the years, those reasons will change as your life changes.”
Experts also agrees that every situation is different so they advise you to take three factors into consideration when trying to determine the amount of insurance needed:
- Needs-based: How much would my loved ones need in the event of my premature and untimely death?
- Goals-based: How much would my family need to reach their financial goals, especially if I am no longer there?
- Legacy: What are you hoping to leave behind to someone?
Get enough insurance to pay off outstanding loans and liabilities as well as burial costs. You don’t want loved ones to experience emotional and financial stress.
Joint Life Insurance Policy for Couples
Typically, a life insurance policy applies to one person. A joint policy, however, covers two individuals.
Like an individual life insurance policy, the main purpose of a joint life insurance policy is to financially support your loved ones after you and/or your spouse have passed away.
The beneficiaries can use the funds from the policy as an inheritance, debt repayment, or anything they would like.
Although joint life policies are most common among spouses, you don’t have to be legally married in order to buy coverage.
Joint life insurance policies are available to domestic partners as well as business partners, as long as you can prove insurable interest, like shared assets.
How Does a Joint Life Insurance Policy Work?
A joint life insurance policy is one contract covering two lives, with one premium being paid.
An individual life insurance policy covers a single person, but joint life insurance covers two people – and only two.
Joint life insurance isn’t just for married couples or romantic partners. You might also decide to get joint life insurance if you have a business partner.
Having joint life insurance ensures that the surviving business partner can continue to operate or make the appropriate company changes without the other.
There are two types of joint life insurance — first-to-die and second-to-die policies. We have explained this concepts already at the top of our page.
Why Choose Joint Universal Life Insurance?
Besides the convenience of insuring two individuals under one policy, Joint Universal Life offers additional benefits:
- Flexible: Joint Universal Life allows you to increase or decrease the amount of your premium payment.
- Growth: Your policy builds a tax-deferred cash value over time.
- Accessible: You can access this cash value via policy loans or withdrawals to pay for your child’s education, make major home improvements, grow your business and more.
- Accommodating: A survivor purchase option allows you to purchase a new permanent policy after the death of the first insured without evidence of insurability — so long as it’s been fewer than 90 days since his or her passing and you’re younger than 75.
- Affordable: Because Joint Universal Life pays a death benefit on the first insured, it’s typically more affordable than purchasing two separate permanent policies.
- Customizable: Talk to your Insurance agency about optional riders that can add benefits to your policy.
Companies that Offer Joint Life Insurance Policies
Joint life insurance policies are increasingly difficult to find, especially as term life insurance premiums are dropping. However, there are a few major insurance companies that still offer this type of coverage.
State Farm sells a survivorship universal life insurance policy, which provides a death benefit once both insured individuals pass away.
You can get coverage between the ages of 18 and 90, or 18 to 78 if you live in California.
Coverage starts at $250,000 and there are a handful of riders you can add to the policy for more protection, including an estate preservation rider, level term rider, and waiver of monthly deduction rider.
Another insurance company that sells joint life coverage is Nationwide, specifically, a survivorship indexed insurance policy.
It’s available for couples between the ages of 40 and 70, with a minimum death benefit of $100,000.
Like State Farm, Nationwide also offers a variety of riders that can be purchased for increased coverage, like a long-term care rider, estate protection rider, extended no lapse-guarantee rider, and policy split option rider.
Joint vs. Separate Life Insurance
Married couples may have the option of obtaining separate life insurance policies or a joint life insurance policy.
A single life insurance policy will cover only one individual, while a joint life insurance policy will cover both spouses. Both options have pros and cons.
Joint Life Insurance Policies
A joint life insurance policy, also known as a dual life insurance policy, covers both spouses and may be able to cover more individuals.
These policies are generally used by married couples who want to cover both spouses under one policy.
Married couples who want to lower life insurance costs and protect their assets from taxes after death may consider getting a joint insurance policy.
Joint life insurance comes in two options: first-to-die and second-to-die. In a first-to-die policy, the surviving spouse will receive the death benefit payout after the first spouse dies.
In the second-to-die, also known as survivorship policy, the beneficiaries will receive the death benefit after both spouses have passed away.
Separate Life insurance Policies
A single life insurance policy will cover only one individual and will pay out a death benefit if the individual passes away.
There are two main types of individual life insurance policies: term and permanent.
Term policies cover you for a set period of time, usually 10 to 30 years, and permanent policies last for your lifetime and do not expire (assuming you pay the premiums). A separate life insurance policy is not tied to your marital status.
Buying separate life insurance policies allows each spouse to choose from a variety of different options, including term life, whole life and universal life insurance.
Since the policies aren’t tied together, you’ll be able to personalize each to the needs of each spouse.
Frequently Asked Questions
What is the Best Life Insurance Company for Married Couples?
The best life insurance company will largely depend on your needs and preferences. No single company will be the best for everyone.
Understanding what factors matter most to you — like customer service, customization options or price — and then getting quotes from several carriers might help you find the right fit for your needs.
Is Life Insurance for Married Couples Cheaper?
Not necessarily. Life insurance policies, even joint policies, are rated based on your age, health conditions and coverage amount. Your rates will vary based on your unique circumstances, just as they would if you were single.
Can I List my Children as my Beneficiaries?
Yes, but maybe not directly. If your children are 18 or older, you’ll likely be able to list them as beneficiaries without taking any other steps.
However, if your children are minors, you might not be able to leave your death benefit directly to them.
Most states and insurance companies have regulations about minor beneficiaries. You may need to create a trust to list as the beneficiary, or list your children’s legal guardian instead.
Should Couples have Life Insurance?
You’ve both put in a lot of effort to make your life together a success. You’ve made plans for a prosperous future. Life insurance ensures that the life you’ve created together will continue.
If you pass away, you want to make sure that your family can handle day-to-day responsibilities as well as plan for the future, such as college, vacations, and other significant milestones.
If this was helpful, do well to share with your family and friends, and also, leave your opinions in the comment below.