A Married Couple’s Guide
If you’re just about to get married or you’re committed to a happy marriage ‘til death do you part, thinking about death is probably the last thing you want to do. Nevertheless, securing the future of your loved ones is a great investment, and potentially one of the best things you could do.
- Many couples choose to get life insurance to secure their family’s future in the event of unexpected death, injury or illness.
- Available life insurance options for married couples are term life insurance and joint life insurance. The type of cover that is best is the one that will suit your family’s unique financial requirements.
- The younger and healthier you are when you take out life insurance, the less it will cost you in the long run.
Why Married Couples Should Get Life Insurance
Here are some very practical and prudent reasons to get life insurance as a couple:
- In the event of your death, your death benefit can supplement your spouse for a time so they aren’t left high and dry suddenly trying to run the household on a single-income.
- Life insurance can take care of your funeral or after-death expenses, to allow your family to grieve without worrying about the mortgage or school fees.
- Life insurance also supports your spouse in paying for any debts you may have accrued together.
Which Spouse Should Get Life Insurance?
In getting life insurance for couples, one of the first questions is which spouse should get life insurance. There’s a common misconception that only the breadwinner or the spouse with the higher income should have life insurance. The reality is that it’s always best to make sure both spouses are covered.
If one spouse is the breadwinner or brings in a significantly higher income, that spouse could choose to have a broader life insurance policy. This way, their family will be covered and secure financially in the event of death.
The homemaker spouse also has significant financial worth. If they pass away, the breadwinner spouse will then have to spend to hire services to take over the homemaker spouse’s tasks at home. You’ll find that child care, housekeeping, cooking, laundry, and similar services will add up over time, and this is where cover comes in handy for both of you.
If both spouses are working and have more or less the same incomes, they can expect about the same types of life insurance cover.
What Kinds of Life Insurance are Available For Couples?
Life insurance for couples is divided into two categories: term life insurance and joint life insurance.
Term Life Insurance
Term life insurance offers temporary coverage for typically 10 – 30 years. The good thing about term life insurance for couples is that it’s cheaper and easier to get approved, especially while you’re young and healthy. This is because term life insurance covers death benefits only, and only if you die within the period of your cover. If you wish to continue being protected after this set period, you’ll have to take out a new policy. The downside is that after the term life insurance cover expires, getting new coverage tends to be more expensive.
Joint Life Insurance
One kind of permanent life insurance for couples is joint life insurance, which covers both spouses under the one policy.
Joint life insurance has two options, a first-to-die insurance cover or a second-to-die insurance cover. Under a first-to-die insurance cover, the death benefit is paid to the remaining spouse and the children upon the death of the first spouse. Under a second-to-die insurance cover, the death benefit is not available until both spouses pass away, and is paid out to the children.
The upside of joint life insurance is that it is often more affordable for couples who cannot afford separate life insurance policies, as the cost of the premium is split 50/50.
The downside is that certain factors may complicate this set-up, such as in the case of one spouse earning significantly more income than the other (thus putting more burden on the lesser-earning spouse to meet a 50/50 arrangement), or in the event of divorce. Further, under a first-to-die insurance cover, the policy ends after one spouse dies. The remaining spouse will lose their life insurance cover, and they will likely have to spend again to take out a new policy for themselves.
In the absolute worst-case-scenario, if both spouses die, having joint life insurance means that the children will receive only one death benefit payout, compared to receiving two if the couple chose to get separate life insurance covers.
So Which is the Best Type of Life Insurance For Couples?
If there were only ONE best type of life insurance, then that’s all we would have! Different life insurance plans are available because different couples have different needs.
Young couples often start off best with term life insurance. Starting a family entails laying the foundation for major long-term investments: the mortgage on your first home, buying a car, hospital and maternity bills, children’s education, etc. During these years, little is set aside in the way of savings. Term life insurance is more affordable and does the job of protecting your family from unexpected loss of income at a cost that can be easily squeezed in among the other larger expenses.
The other option for couples is joint life insurance. Here are some reasons you may want to consider taking out life insurance as a couple.
- When you’re younger and healthier, you have a better chance of getting your desired life insurance policy approved. Life insurance providers take age, health, and medical history into consideration when working out your life insurance policy. If you take out coverage when you’re young and have fewer health problems, you present less risk to the insurance company, so your premiums will also be less expensive.
- This means that the sooner you get life insurance, the cheaper it will be. If you take out a level premium, life insurance premium rates lock in when you start, and that’s the fixed amount you’ll pay for the duration of your policy. So suppose you take out cover when you’re 30 years old at $30, and suppose premiums increase by $10 every ten years of age. Your premiums for the next three decades will be cheaper than if you began at 40, 50, or 60.
- Practically speaking, starting with smaller premiums makes it easier to work life insurance into your budget. A newlywed couple with no kids will find it easier to make a habit of putting money away for life insurance every month compared to a couple with one or two children who has to juggle premiums on top of already-existing family expenses.
- It’s best to always be prepared! You can never tell when calamity will strike – it could be in a decade, in a year, or tomorrow. It’s vital that you don’t put off securing life insurance as a couple so you’re both protected 100% of the time.
Your unique financial needs, as well as you’re long-term goals as a couple will determine the type of life insurance best for you. Not all couples follow the same path, so it’s still best to speak with an insurance adviser and get a quote to determine the best type of life insurance for you and your spouse.
Marriage isn’t just about romance and dreams and being together forever, it’s also about being responsible enough to secure each other’s future even in the worst-case scenario. Getting life insurance for couples ensures that your spouse and children will be taken care of, whether you are with them or not.