There are a lot of major life changes that come with getting married, from setting up your new household and family to establishing a financial plan. An important component of establishing your financial future should be obtaining enough life insurance coverage for both parties. Here’s a guide to life insurance for spouses.
Why Married Couples Need Life Insurance
There are multiple reasons why married couples need life insurance, but there are various life events in which married couples having life insurance is especially important:
- Starting a family
- Buying a house
- Starting a business
You want to ensure that your spouse is financially supported in the event of an unexpected death, which can be scary to think about, but is important for the financial future of your family.
Considerations When Choosing a Life Insurance Beneficiary
A life insurance beneficiary is the person or entity you name in your life insurance policy to receive the death benefit. It’s common to choose your spouse or significant other as your life insurance beneficiary when the time comes.
You might also want to take into consideration a contingent beneficiary, in case your primary beneficiary is unable to receive the payout. It’s also important to review your life insurance beneficiaries every couple years, especially following major life changes.
Should we have joint or separate life insurance policies?
Unlike an individual shopping for a life insurance, shopping for a life insurance policy with a spouse brings in the option of a joint life insurance policy. Learn more about the advantages and challenges of both a joint life insurance policy and individual life insurance policies.
Joint Life Insurance Policies
Joint life insurance policies are typically permanent policies that cover two people and are usually only available for married couples or domestic partners. There are two main types of joint life insurance policies: a first-to-die policy or a second-to-die policy.
A first-to-die policy pays out upon the death of the first policyholder. If the surviving spouse wants coverage, they would have to apply for a new policy. A second-to-die joint life insurance policy doesn’t pay out until both policyholders have passed away.
Separate Life Insurance Policies
Separate policies tend to be less expensive than joint life insurance policies, as each policy is tailored to each individual’s needs. Depending upon the jobs and responsibilities of each spouse, one may end up needing more coverage than the other.
What’s the best life insurance for married couples?
The best life insurance for married couples depends on why life insurance is being purchased in the first place. However, term life insurance is often the most popular option for both individuals and couples, as it’s simple, affordable, and you only buy it for as long as you need it.
How does marital status impact a life insurance policy?
Marital status typically does not affect life insurance rates, as rates are based on factors like age, gender and medical history. Life insurance policies are affected by marital status, however, when the policyholder is newly married or recently divorced. Your marital status can affect who is named as the beneficiary, but it can also have an impact on your personal finances, which can change your coverage needs.
Life Insurance for Unmarried Couples
Domestic partnerships need the same protections as couples who are married, but couples who aren’t married must prove insurable interest in order to list their partner as a beneficiary on their policy. A person has an insurable interest if upon the death of an insured individual, that person would suffer a financial loss due to the insured’s death.
Can I take out a life insurance policy on my spouse?
It is possible to buy life insurance on someone else, however there is a strict criteria that must be met in order for a carrier to grant coverage. In order to do so, you have to first prove that their death would negatively impact your finances.
The life insurance application process will be similar to if you were purchasing the policy on yourself. The insured individual would have to provide their consent, as well as undergo a medical exam and the typical underwriting process. The main difference in this shopping and purchasing process is that the insured is not the policyholder.
SelectQuote Can Help Find Life Insurance for You and Your Spouse
Buying life insurance is a way to ensure your family doesn’t suffer any financial burdens on top of the emotional challenges that come with losing a loved one. We can simplify the process of purchasing life insurance and help you better understand what policy might be right for you and your spouse.