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Life insurance for couples

What are the benefits of a joint life insurance policy?


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If you’re in a relationship with someone and you both have financial obligations that would be left behind if one of you were to pass away, it’s worth considering coverage through a life insurance policy to protect your partner from a potential financial hardship. Some perks of a joint couple policy include:

  • Lump sum payment. A lump sum benefit from a life or critical illness policy can provide a financial safety net for your loved ones. The payout acts as an income replacement to make sure the people you leave behind can maintain their lifestyle.
  • Joint policy discounts. Some life insurance providers will offer discounts on premiums for couples.

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A few reasons to consider couples life insurance…

  1. Increased expenses.
    From having children, to buying a new home or car – couples often take on big financial obligations together. Having couples life insurance would ensure that these expenses and obligations would still be met should a tragedy happen to your family.
  2. Shared debt.
    When you die, your debt might pass onto your spouse if you’re married. Your spouse will be on the hook for all joint accounts and your personal credit cards balances. Life insurance can help cover any debts to reduce stress on your spouse.
  3. Lock in your insurance rates.
    Life insurance costs increase every year you and your significant other gets older. The earlier you apply and lock in a quote, the more money you’ll save over the years. You’ll never know when you might develop a medical condition that’ll increase your rates significantly.

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Types of life insurance for married couples

There are two types of joint life insurance policies that can cover married couples. With both of these policies, you’ll pay a single premium.

First-to-die life insurance

This policy pays out when the first partner dies. It’s designed to help the surviving spouse financially, and it typically costs less than taking out two individual policies.

Survivorship life insurance

Also known as second-to-die life insurance, survivorship policies are paid out after both partners pass away. Their main purpose is to support any beneficiaries left behind, like children, and help to pay high estate taxes.

Survivorship policies are pretty rare, but the insurers that offer it often give couples a choice between a term or permanent policy, like whole or variable life. These policies build cash value over time, which can be useful if the couple has a special needs child that requires lifelong care, or if the surviving spouse needs to access the money while they’re still alive.

What life insurance can cover

Getting married is usually the point where couples look at each other and decide that life insurance is must. It’s at this stage when new financial obligations begin to pop up, these can include:

  • Ongoing debt. You likely have expenses like a car loan, credit card debt, personal loans and student loans — these bills can add up significantly.
  • Mortgage. Many couples will look to buy their first home after tying the knot. A new home is one of the bigger financial commitments people will make in their lives — and it comes with a mortgage that has to be paid. Having the right level of coverage as a safety net will give you peace of mind that you’re spouse won’t be left with a hefty debt.
  • Children: The arrival of your first child is an exciting time for any parent, and with that comes the realization that you want your children to be well taken care of if you or your spouse were to pass away or become seriously ill. Some of the expenses that could be covered by a life insurance policy are:
    • Clothing
    • Food
    • School tuition
    • Medical bills
    • Household expense
    • Childcare

Should unmarried couples buy life insurance?

Whether life insurance makes sense for unmarried couples really comes down to their own situation and if they have any current or future shared obligations. Some of these obligations could include:

  • Children
  • Mortgages
  • Short term debts (credit card)
  • Other loans (car loan)

If there are shared financial obligations, one of you is a cosigner for the other, if you have a child together or have accumulated mortgage debt, then it’s worth looking into a joint life insurance plan to give your parter financial protection if the unexpected happens.

What’s the benefit of taking out coverage at a younger age for couples?

Even if a couple doesn’t have the same financial obligations as they expect to have later in life, taking out a policy at a younger age can save applicants thousands down the line.

When you’re younger, you’ll more likely be in better health and looked at as less of a risk to an insurance underwriter, which will lead to cheaper premiums.

Some insurance providers also let applicants purchase a “Guaranteed insurability rider” which allows policyholders to apply for additional coverage in the future without having to undergo further medical underwriting. This feature relieves the pressure of trying to predict how your situation may change in in the future.

What happens to joint life insurance for divorced couples?

Unfortunately not every relationship withstands the test of time and many people are often left wondering what happens to their joint policy in the event of divorce or separation.

Here’s what could happen for people in this situation:

  • One spouse keeps the policy. In this case, the policy will be transferred to one policy owner and they’ll be entitled to all of the policy benefits. The person who’s assuming ownership of the policy should repay an agreed upon percentage of past premiums paid to the other person since they’ll no longer benefit from the coverage.
  • Cancel the policy. The joint policy can be canceled and both parties can apply for two new individual policies.
  • Keep the policy. If the couple remains on good terms after the separation, the policy could remain in place with an agreement for premium payments to be shared. Because this can get complicated as new financial obligations arise, legal paperwork stating what each party is responsible for and entitled to can save a headache for both people down the road.

Bottom line

Life insurance can leave behind a legacy for your family and loved ones if you were to pass away. However, the needs for each individual will vary as everyone walking earth is in a different situation. A policy can add a lot of financial value and it’s important that you sit down with your partner and discuss all of your options.

If something happened to either of you unexpectedly, would you need life insurance coverage to financially protect you? That sort of peace of mind will be worth the premiums paid for a life insurance policy.

Some factors to think about for couples looking to take out life insurance

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