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Shopping for life insurance with your spouse

Setting up the right financial plan for your family involves life insurance coverage for not just you, but also your spouse.

Nupur Gambhir

Nupur Gambhir

Published May 4, 2020

KEY TAKEAWAYS

  • Married couples have the option of buying separate life insurance polices or a joint policy, which is a costlier policy that insures both spouses

  • Though non-working spouses don’t provide an income, life insurance can compensate for the loss of the labor they perform

  • It is illegal to take out a life insurance policy on your spouse without their knowledge

If you’re shopping for life insurance, you probably recognize the need to have a financial safety net for your family. But if you’re married, your safety net probably won’t be complete unless your spouse also has a life insurance policy. Married couples shopping for life insurance together have a few key considerations they should keep in mind to set up the right coverage for their family.

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How spouses can shop for life insurance together

Similarly to being married and shopping alone for life insurance, when you’re shopping for life insurance with your spouse you’ll need to ensure that your policy adequately protects your dependents. This will require determining how much coverage you need and how long your policy should last.

How much life insurance married couples need

By figuring out the right amount life insurance you need and a term policy’s length that makes sense for your family, you can avoid overpaying for coverage.

Life insurance coverage is an income replacement, meaning you’ll want to consider the financial impact of losing either person in the partnership. The best way to do this is to take a needs-based approach and calculate your financial obligations. This involves taking into account:

  • College costs
  • Childcare and care for other dependents, such as aging parents
  • Debt. Unfortunately, co-signed debt survives even death
  • End-of-life expenses such as funeral expenses or medical bills
  • Financial cushion for the family

The Policygenius life insurance calculator can help you determine tailored coverage suitable to your needs.

Choosing a beneficiary

Your life insurance policy’s primary beneficiary is the person who will receive the death benefit if you die. Policyholders can choose multiple beneficiaries who will receive an equal portion of the death benefit. There is also the option to pick a contingent beneficiary, or the person who gets the death benefit if the primary beneficiary is unable to collect the money.

Most spouses shopping together will choose their partner as the primary beneficiary, though you do have the option of choosing your children or even an institution. It’s usually not recommended to name your children as the beneficiaries on your life insurance policy because most life insurance companies are prohibited from paying out the death benefit to anyone under the “age of the majority,” which is 18 in most states and 19 in Alabama and Nebraska.

Deciding between term or whole life insurance

When you’re purchasing life insurance, you need to decide how long you would like your coverage to last. A term life insurance policy offers coverage for a specific period of time, anywhere from five to 30 years, while a permanent life insurance policy lasts your entire life.

Because term life insurance policies are cheaper — anywhere from 5 to fifteen times more expensive than whole life insurance — they tend to be the best policy option for most people. However, couples who need lifetime coverage or want to utilize the cash value of a life insurance policy might find that a type of permanent life insurance called whole life insurance is a better fit for their needs.

Picking the right life insurance company

The health status of both you and your spouse will likely determine what life insurance company you purchase your policy from. Some are better than others at accommodating health conditions like diabetes or high cholesterol and provide lower premiums for applicants with those conditions.

Other considerations, such as your occupation and family history will also impact the types of rates you receive on a policy.

Though you and your partner may go through the life insurance application process together, you may end up purchasing policies from different life insurance companies based on your individual circumstances.

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Separate vs. joint life insurance policies

One factor unique to shopping for life insurance with a spouse is the ability to purchase one policy that covers both of you, called a joint life insurance policy, although separate life insurance policies tend to be more common.

Separate life insurance policies

Purchasing separate life insurance policies at the same time doesn’t result in lower premiums, though separate policies still tend to be cheaper than joint life insurance policies. Additionally, purchasing two separate policies allows for each policy to be tailored to each spouse’s individual needs. For example, you may want the breadwinner to have more coverage than a stay-at-home spouse, or you may want only one person to have riders that offer extra provisions, like early access to the death benefit.

Married couples purchasing separate life insurance policies can still save time by scheduling a joint medical exam. This is the part of the underwriting process where the medical examiner performs a physical to get an idea of your current health and medical history to determine what life insurance health classification you receive.

Joint life insurance policies

A joint life insurance policy is one life insurance policy that covers two people and is usually a permanent policy. The main consideration is if you want a first-to-die policy or a second-to-die policy.

  • In a first-to-die joint policy, the policy will pay out upon the death of the first policyholder. If the surviving spouse wants coverage, they’ll need to apply for another policy.
  • With a second-to-die joint policy, also known as survivorship life insurance, the policy doesn’t pay out until both policyholders are deceased.

Both types of joint policies have benefits and drawbacks. First-to-die policies are typically more expensive, but second-to-die policies don’t work as well as income replacement since both policyholders must be deceased before the policy pays out.

Separate term policies are typically the best option for married couples because they’re less costly and provide flexibility in terms of how long each policy lasts and what customizing riders each policy has. And, in the case of a divorce, splitting up a joint life insurance can get tricky.

But joint life insurance policies could be a good option if one spouse’s health bars them from getting their own life insurance policy, though this will result in higher premiums for the spouse in better health.

The best life insurance for married couples will depend on the individual circumstances, so you should talk to a licensed expert about whether separate policies or a joint policy is right for you and your spouse.

Life insurance for stay-at-home parents

Since life insurance is primarily for income replacement, it may seem like non-working parents don't need it. But while non-working parents don’t provide direct income, they do perform labor that would have to be replaced if they weren't around, including childcare.

A non-working spouse can qualify for a certain amount of coverage in proportion to their working spouse, though this varies for each life insurance company. The graph below demonstrates the type of coverage offered to non-working spouses by the top life insurance companies:

LIFE INSURANCE COMPANYNON-WORKING SPOUSE POLICY
AIGMatches up to $1.5 million of working spouse's coverage. Coverage limited to 10x working spouse's income if household income is less than $25k.
Banner LifeMatches working spouse's coverage. If household income is below $20k, no coverage will be offered.
Lincoln FinancialMatches 100% of working spouse's coverage. Maximum coverage is determined on a case-by-case basis.
Mutual of OmahaMatches 100% of working spouse's coverage up to a maximum of $2 million
Pacific LifeMatches 100% of working spouse's coverage up to a maximum of $3 million ages 70 and below. Matches coverage on a case-by-case basis ages 71 and above.
PrincipalN/A
ProtectiveN/A
PrudentialMatches 100% of working spouse's coverage. Maximum coverage is determined on a case-by-case basis.
SBLIMatches up to $2 million of working spouse's coverage
TransamericaMatches up to 50% of working spouse's coverage up to a maximum of $2.5 million

Life insurance and domestic partnerships

In the last 20 years, how the typical American family looks has evolved. As marriage rates decline and more people opt-in for domestic partnerships or civil unions, 41% of children under the age of 18 are part of households without married parents, according to Pew Research. How does this affect your life insurance coverage?

If you’re in a domestic partnership or civil union, you need the same protections as couples who are married. You share bills, mortgages, and dependents, and require the same amount of coverage and benefits that married couples do. So what type of life insurance coverage can you get if you’re in a domestic partnership? As long as you can prove insurable interest, you’re eligible to get a policy and list your spouse as your beneficiary.

If you’re not legally married, you are still eligible for life insurance coverage but may be asked additional questions during the underwriting process. Life insurance companies will usually want to see financial justification before they offer you life insurance coverage. Regardless of your marital status, you’ll need to demonstrate that your dependents would financially suffer if you died unexpectedly.

If you’re married, this process is a little more cut and dry. For unmarried couples, you may have to provide supplemental documentation to demonstrate that you and your partner share expenses, live or own a home together, or share dependents. Essentially, if you can demonstrate to the underwriter that your beneficiary will incur a financial loss if you die, you shouldn’t have a problem getting life insurance coverage — there just might be some extra paperwork.

Can you take out a life insurance policy on your spouse?

One final consideration: can you buy a life insurance policy for your spouse without involving them, or vice versa?

The way that the life insurance application process works, it’s technically not possible. If you do manage to find a loophole that allows for you to purchase a policy without their approval — such as forging their signature — it’s probably illegal.

To get a life insurance policy, the individual who will be insured needs to take the life insurance medical exam. Even if you opt for a no-medical exam life insurance policy, they would need to sign for the policy and give their consent. Signing for the policy on your partner’s behalf — or anyone for that matter — is considered life insurance fraud and can have some serious consequences.

However, if your partner is willing to participate in the underwriting process and is willing to sign off on the policy, you can still take out a life insurance policy on them and pay the premiums. To do so, you’ll need to prove insurable interest, which is proof that you would be financially burdened if they die.

About the author

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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