Life Insurance For Spouses

    Buying Life Insurance For Your Spouse: A Guide To Taking Out The Right Policy

    Whether you’re newlyweds or married for over a decade, you and your spouse will eventually have to broach the topic of life insurance. Most married couples depend on one another's income to pay bills and manage debts on credit cards – taking out a life insurance policy can serve as a financial cushion if anything goes wrong.

    Despite this, many married couples opt for a single life insurance policy, which may not provide optimal coverage for dependents in the future. In this guide, readers will learn why both spouses should buy life insurance and how to select the appropriate policy.

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    Should Each Spouse Have Life Insurance?

    Your unique circumstances and future goals will determine whether each spouse should buy life insurance. Ask yourself the following questions:

    • Am I earning more or less than my partner? 
    • Do I suffer from a debilitating health condition that disqualifies me from an individual contract?
    • Are we planning to have children in the future?
    • Do I have outstanding student loans or a mortgage?

    If one spouse’s insurance can’t cover these financial goals, purchasing individual policies might work to your benefit.

    How Much Do You Need?

    If each of you decides to apply for individual policies, you’ll have to calculate the amount of coverage you want.

    In most cases, a policy acts as an income replacement for the surviving spouse, should their partner unexpectedly pass away. Many insurance companies recommend purchasing coverage equal to the amount of money you’d lose if one of you dies.

    You’ll want to think about the financial burdens they leave behind such as:

    • Childcare and education expenses
    • Allowances for other dependents such as parents or siblings
    • Outstanding debts on credit cards, student loans, and mortgages
    • Final expenses, such as funeral costs or medical bills
    • Day-to-day costs of living

    Once you’ve calculated the appropriate amount of coverage for both spouses, you’ll have to decide how long you need it.

    How Long Should Your Coverage Last?

    If you decide to take out term life insurance, you can choose how long you want your term to last. Most term life insurance provides coverage for 10, 15, 20, or 30 years. 

    When selecting a term length, think about your reasons for taking out insurance coverage. If your ultimate goal is to make sure your children complete their university education, you may want to purchase a longer-term policy. For example, if you have three young children, it might make more financial sense to take out a 20-year term at $250,000 than a 15-year term at $100,000.

    After you’ve determined how much coverage each of you needs and for how long, it’s time to explore the type of insurance that best suits your financial goals.

    Choosing Between Whole vs Term Life Insurance 

    Term life insurance is the most cost-effective option for couples because it only covers you for a period of time. Your age and health conditions also determine how much you pay in premiums. Naturally, younger applicants with no health issues will pay less. If one of you can only afford a shorter-term contract, the other can purchase 30 years of coverage to make up the difference.

    On the other hand, whole insurance is ideal for couples who want to secure lifetime coverage or use the cash value component for investment purposes. If you think you’ll need more coverage than what term life insurance can offer, you might benefit from a whole life policy.

    Always compare policy features, terms, and riders before you make an application.

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    Should You Have Separate Or Joint Insurance?

    If only one of you qualifies for whole life insurance, you might consider a joint policy with a customized payout option. When selecting between separate or joint policies, consider the following factors.

    Individual Insurance

    Buying separate life insurance policies doesn't guarantee lower life insurance quotes. However, they do allow each spouse to tailor the policies according to their individual needs. For example, a high-income spouse may want additional provisions or riders that a stay-at-home spouse wouldn't.

    Married couples buying individual life insurance policies can also schedule a joint medical exam to save time.

    Joint Insurance

    Similar to whole life insurance, a joint policy is permanent. Its main difference is that it covers two people instead of just one. 

    You can choose from two payout systems with joint life insurance:

    • First-to-die joint policies: They pay upon the death of the primary policyholder. However, a surviving spouse will have to apply for a second policy to receive life coverage. 
    • Second-to-die joint policies: Also known as survivorship life insurance, this contract will only release benefits after each policyholder passes away. 

    Alternative Life Insurance Options For Your Spouse

    If your spouse suffers from severe health conditions, they may be ineligible for a traditional life insurance policy. In that case, you can insure your spouse via these alternatives.

    Spousal Rider

    A select few life insurance companies offer a spousal rider, which is convertible to a permanent policy. If you pursue this option, you may have to answer health questions and provide insurance agents with additional information on family history. Keep in mind that the policy isn’t transferable should the primary policyholder pass away.

    Group Insurance

    Depending on your employer, you may be able to cover your spouse via a group life insurance benefit. However, group life insurance coverage typically only provides a small benefit, often ranging from $5,000 to $10,000. Plus, if you leave your job or can no longer provide services due to poor health, you will have to surrender your policy and coverage.

    No-Medical-Exam Insurance

    A life insurance company typically asks for personal information to determine an applicant's health class. If your spouse is in poor health, they may not qualify for the policy they want.

    Instead, they can apply for a no-exam policy that doesn't require them to divulge medical information. While this type of policy is flexible and can offer as much as a $50,000 payout, life insurance rates are often higher than traditional options. 

    How To Find The Right Spousal Life Insurance

    Now that you and your spouse have determined the coverage you need, here are the next steps you have to take.

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    Calculating Living Expenses

    As a rule of thumb, you'll want to calculate your household "cash flow" before you undergo the application process. Coverage should be enough to cover daily living expenses, which includes:

    • Grocery items
    • Clothing
    • Education
    • Credit cards
    • Rent,
    • Childcare

    Picking A Company To Work With

    The company you decide to sign up with is just as important as the policy you choose. For example, let’s say you or your significant other suffer from health problems such as high blood pressure or diabetes. Choosing the wrong company might mean paying higher life insurance rates for a lower health classification.

    When shopping for an insurance company, always get a quote and additional information before you initiate an application. Depending on your individual circumstances and needs, you and your spouse may end up signing with different companies.

    FAQ About Buying Life Insurance For Your Spouse

    Can you purchase life insurance for an ex?

    It's possible, though your former husband or wife will have to authorize the application. You will also have to prove that you are financially dependent on them through a divorce decree or something similar.

    Can you take out insurance on your spouse?

    If you’re purchasing a life insurance policy on behalf of your spouse, you need to involve them throughout the entire process. Even if you manage to secure a no-exam policy, your husband or wife will still need to consent to the policy. Signing off on their behalf is equivalent to fraud – especially if you forge a signature. 

    When should spouses consider getting a policy?

    Ideally, you and your spouse should get started on a policy as soon as you marry. Some couples have this discussion when they start having children. As a rule of thumb, it’s best to plan early – not when you encounter financial trouble.

    Should you and your spouse get the same coverage?

    To determine how much insurance coverage you need, calculate your day-to-day expenses such as your rent or mortgage, food products, energy and utility bills, and childcare costs. As a general rule, it’s best to apply for an equivalent amount of coverage – this ensures that your family can still support themselves should anything happen to your husband or wife. 

    In Conclusion

    Whether you’re a stay-at-home parent or the breadwinner, you can guarantee your loved ones’ future financial security by purchasing shared or individual policies with your spouse. The policy you and your loved one decide to take out will ultimately depend on your overall financial health and future goals.

    Get the best financial safety net with the help of the experts at Wesley Insurance, LLC. Learn how to secure your dependents and protect your family – contact us today for more information and resources!

    Written By Cameron McDowell
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