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How to buy life insurance for your spouse
Once you check off the two major requirements, you can purchase coverage for your husband or wife.
Life insurance offers a financial safety net for your loved ones, which is why many spouses shop for policies together. As a married couple, you have to make a few key decisions before buying coverage.
Can I take out a life insurance policy on my spouse?
Yes, you can buy life insurance on your spouse on two conditions:
- They consent to it. Life insurance is a legal contract, so your spouse would need to sign off on the policy before it goes into effect.
- You can demonstrate insurable interest. In plain English, this means you’ll need to prove that you’d be financially burdened if your spouse died.
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How to purchase life insurance with your spouse
When you’re shopping for life insurance with your spouse, there are two paths you can go down. You can buy two separate policies, or a single joint policy that covers both of you.
Taking out individual policies
“Buying in bulk” is the most common approach. While it won’t lower your premiums, taking out two policies allows you to customize the coverage to meet each spouse’s needs. For example, if you’re the breadwinner, you might want to purchase more coverage so that your spouse can maintain their lifestyle if you die prematurely. Likewise, one spouse may need riders that the other doesn’t, or want a policy that lasts longer.
By buying two policies at once, you’ll probably be able to schedule a joint medical exam at home, too.
Taking out a joint policy
Joint life insurance is typically cheaper than taking out a separate policy on each spouse. There are two types of joint policies to choose from:
- A first-to-die joint policy pays out when the first policyholder dies. If the surviving spouse still needs life insurance, they can apply for a new policy. While this policy isn’t too popular, it’s one way to make sure the remaining spouse has replacement income to pay off a mortgage or other debts.
- A survivorship policy (or a second-to-die policy) only pays out once both policyholders have passed away. It’s common among couples with considerable assets who want to ensure their heirs have the cash to pay inheritance or estate taxes.
How to choose the right life insurance policy
Once you’ve worked out how much coverage you need, move on to these decisions:
- Choose between a term or permanent policy. Term life insurance lasts for a set number of years and pays out a guaranteed death benefit, while permanent policies offer lifetime protection and build cash value over time.
- Pick the term length. A good way to do this is to look at the length of your longest debt or financial obligation. For example, if you have a 30-year mortgage, you might look at a 30-year policy. And if you’re young parents, you might buy a 20-year policy to carry your kids through college.
- Pick an insurer that meets your needs. Take the time to compare policy features and riders.
How much life insurance should you buy?
To figure out how much life insurance you need, consider your current income, financial obligations and lifestyle. When you’re crunching the numbers, think about:
- Dependents. Is there anyone who relies on your income? If you have children or ageing parents, you might want to purchase a policy that will take care of them when you’re gone.
- Debt. Do you have a mortgage, student loans or credit cards? Your debt doesn’t die with you, so your policy should cover those outstanding balances. Creditors will pursue unpaid debt, and it’s a major reason why many families are forced to file bankruptcy.
- Savings. If you have assets, investments, a healthy savings account or a 401(k), you may not need as much life insurance.
- Living expenses. How much of your income goes towards food, clothing, insurance, education and childcare? Factor those costs in to your coverage.
- End-of-life expenses. Many policyholders want to pay for their own funeral or burial costs, so their families don’t need to worry about it.
- Estate protection. To protect your family’s wealth and assets, you could buy a policy that’s big enough to cover estate taxes.
- Legacy. If you want to leave an inheritance or give your family a financial cushion, you might consider purchasing a larger policy.
When to purchase a life insurance policy with your spouse
The goal is to purchase life insurance as soon as you identify a need for it. That way, you’ll lock in the lowest rates for coverage — they’ll only get higher over time. As a married couple, you might decide to buy a life insurance policy as newlyweds or when you take on financial obligations — such as having children or buying a house.
Other life insurance options for spouses
If your spouse is ineligible or has been turned down for a traditional life insurance policy, you could try the following options:
- Buy group insurance for your spouse through your employer. Ask your employer if you can purchase a policy for your spouse. If the offer’s on the table, can sign up during the annual open enrollment period. Just know that group life insurance isn’t portable, and you’ll likely only be able to buy a small amount of coverage — either a percentage of your own group life policy, or a set dollar amount.
- Add a spousal rider to your own term life policy. A handful of providers will allow you to enhance your term policy with a spousal rider. You might need to answer questions about your spouse’s health and lifestyle, so this may not be an option if they have a serious health condition.
- Go with a no-exam policy. Most providers offer guaranteed issue or simplified issue life insurance policies, which don’t require a medical exam. While you’ll skip the blood and urine tests, you can expect to pay a higher premium.
Do stay-at-home spouses still need life insurance?
In most cases, it’s a good idea. While a stay-at-home spouse may not contribute income, they do perform unpaid labor, like childcare, cleaning, cooking, laundry and taking the kids to school.
If your stay-at-home spouse died, how would you maintain your job and take over all of those responsibilities? A life insurance policy could kick in to cover the costs of hiring help or subsidize your income if you decide to reduce your days at work.
A non-working spouse can typically qualify for up to 100% of the coverage of their working spouse.
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Bottom line
You can buy life insurance for your spouse — as long as they agree to it, and you can prove that you’d suffer financially if they died. More often than not, taking out separate policies is the most cost-effective way to buy coverage. But a joint, group or no-exam policy might suit your situation better.
To get the best possible rates, compare life insurance companies.
Frequently asked questions
How can I buy life insurance for an ex-spouse?
Your ex-spouse will need to authorize the policy, and you’ll have to prove your financially dependent on them (like through a divorce decree).
Do I have to name my spouse as my beneficiary?
No. You can name anyone you wish as a beneficiary. Most spouses who shop for life insurance together choose their partner, but you could name a child, sibling, parent, business partner, or even a charity. Your insurance provider doesn’t need to approve your beneficiaries — they just pay out the policy to whoever’s listed.
Does my spouse have a right to life insurance payouts?
If your spouse is a beneficiary on your life insurance policy, they have a legal right to the payout. Otherwise, they have no claim.
There is one exception to this. If you live in a community property state, any assets or income that are acquired during the marriage are the property of both spouses. So, if you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas or Wisconsin and purchased your policy while you were married, your spouse is entitled to the payout.
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