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Term Life Insurance for Couples

term life insurance for all types of couples

 

Your partner in life means everything to you.  Whether you are married or not, your significant other is there for you supporting you through everything life throws your way and you are there for them.  But what would happen if you suddenly were not there anymore?

You are there for each other emotionally and physically, but are you also financially supporting each other?  If your significant other relies on your income, they are going to struggle if it is no longer available.  Term life insurance would ensure your loved one would be safe from financial disaster if you died unexpectedly.  Quotacy, an online life insurance agency, will guide you both through the process of getting term life insurance so your loved one will not feel financial struggle in the wake of unexpected loss.

Married Couples

Married couples, especially if you have children, have the greatest need for life insurance.  You have made a lifelong commitment to this person through sickness and health, but if you died unexpectedly how would they get by without your income?  Mortgage income, credit card debt, funeral expenses, these are all things that a term life insurance policy could help pay for if something happened to one of you.  If you have children, everyday expenses (such as daycare) and even college could be taken care of as well.

In most cases, it’s important that you both have life insurance.  Even if you are not providing a primary source of income, such as a stay-at-home parent, you should have a life insurance policy as well.  If a stay-at-home parent were to suddenly die, imagine everything the remaining spouse would have to take care of.  Would you have enough money to cover taking off work to be there for your children and figure out who is going to do everything the stay-at-home parent did?  This includes but is not limited to providing clothing and meals, daycare, and transporting your children to and from school and other activities.

Married couples can either name each other beneficiaries of their own life insurance policies, or own policies on one another.  If your net worth, including life insurance, is relatively high (in the millions) owning life insurance on each other, versus owning one’s own policy, is best so it’s not included in your estate.

If you are the owner of your own life insurance policy, it will become part of your taxable estate when you die.  If your spouse is the beneficiary of your policy, then the proceeds would be protected by the martial deduction law.  The martial deduction law allows married couples to transfer an unlimited amount to their spouse without an estate tax hit; however, the surviving spouse does not get this privilege (unless they remarry) and if his/her estate exceeds the federal and state estate tax exemption then it will be taxed upon their death.

If you make your spouse your primary beneficiary, be sure to include secondary beneficiaries as well.  In the event that the both of you pass away at the same time (e.g. a car accident) or your spouse passes before you, there should be contingent beneficiaries next in line.  Keep in mind with most policies you can change your beneficiaries at any time.  Reviewing your policies regularly is a good idea.

As a couple, you may wonder if buying two policies from the same insurance carrier is easiest, but the insurance companies follow different sets of underwriting guidelines.  Every individual applying for life insurance has a different health situation and, obviously, different family history so what might be the best carrier for one case, may not be the most affordable for another.

Unmarried Couples

Some may wonder if you can get life insurance on each other even if you are not married.  You can’t even get a shared gym membership unless you share the same bank account.  However, you can own each other’s life insurance policy if you can prove there is an insurable interest.  In other words, you have to prove the other person would have financial hardship if you died.  Owning a business together, living together and both being listed on the lease, or having a child are examples of insurable interest; proving that your significant other would be financially impacted if you died.

Same-Sex Couples

Gay and lesbian couples in committed relationships share the same concerns as straight couples:  What will happen to my loved ones if I die unexpectedly?  You do not want your partner to struggle financially if you die and if you have any children you don’t want their standard of living to have to change.

If you are unmarried you can name each other the beneficiaries of your term life insurance policies as any heterosexual unmarried couple can as long as you have proof of insurable interest.  (Keep in mind the previously mentioned estate tax issues with this though.)

If you are married you can own policies on each other if you live in a state that recognizes same-sex marriage.  As of April 2015, 37 states legally recognize same-sex marriage.  If you live in one of the states that does not legally recognize same-sex marriage, you can still get life insurance on your partner but once again may need to prove insurable interest.

The life insurance company to which you apply generally will not rate you based on whether you are in a same-sex relationship.  They will underwrite you as any other applicant.  Since the Supreme Court struck down a key part of the Defense of Marriage Act in 2013, married same-sex couples may access marriage-based benefits under federal law.

No matter what type of relationship you’re in, whether you have been together with your partner for 20 years and have never married or whether you just got married last week, life insurance should be top on your financial planning list.  You are there for each other now and you want to support each other in the future, even if one of you is gone.  Start planning now by taking 30 seconds to get a term life insurance quote.  This is the one thing you may wish you didn’t put off until tomorrow.

Have you purchased life insurance? Would someone be financially impacted if you were to die suddenly?

 

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About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

9 comments

  1. I feel like we have enough life insurance at this point. We bought policies when we were really young and more since then. I would like to think our family is covered in the event of one of our deaths.

    • I have a ten year policy that will be done this year and I’m sure the price will go up to replace it. I wish I’d done a 20 year term when I was younger.

  2. We have a fair to good amount of coverage, but have been waiting until I lost weight until I bought more to get to the point I wanted. Thankfully I can start looking into getting more now. 🙂

  3. I have not purchased life insurance yet but it’s one of my goals this year. I think it’s extremely important to get it if you are married, especially if you have any debt.

  4. My husband doesn’t work (and was, until recently, a smoker) so we’re not insuring him. But that means I need to be sure he can be taken care of if something happens to me.

    Unfortunately, a couple of health conditions means I pay $50/month for $125,000 coverage. But it’ll be enough to pay off the house and leave him with a little breathing room for about two years.

  5. I didn’t know you could lock in life insurance while you’re young. I think it might be different in Australia! Cheers Kim 🙂

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