Getting married is a major life milestone that can fundamentally change how you look at the future. Spouses often use their combined incomes to improve their lifestyle and save for future milestones like having a child or retirement.
If one of you unexpectedly passes on, losing that income can cause significant financial challenges for the other spouse and your young family. That’s why most newlyweds should consider getting life insurance. Read on to learn how life insurance for married couples works and how it can help provide financial security.
What is life insurance?
Life insurance is a policy that pays beneficiaries in the event that you pass away. Like other insurance policies, you make regular premium payments to keep the policy active. On your passing, your beneficiaries may receive a designated amount known as a death benefit.1
Beneficiaries may be your spouse, children, a parent or another loved one. A death benefit can help cover the costs of a funeral, living expenses, childcare, debts, college tuition and help reduce the burden experienced by a lost income.
Two of the most common types of policies are term and whole life insurance, which work in different ways:
- Term life insurance: Provides life insurance coverage for a specific time period, such as 10 to 30 years. If you pass away before the end of the term, your beneficiaries will receive the death benefit.
- Whole life insurance: Whole life insurance provides coverage your entire life as long as you pay your premiums keeping the policy active. It includes cash value, which can accrue interest at a fixed rate.
How life insurance for married couples work?
Married couples may get a joint life insurance policy or separate policies. Individual life insurance policies help cover just one spouse, but a joint one helps to cover both. In either case, you’ll pay premiums in exchange for a death benefit.
Joint life insurance
Also called a dual life insurance policy, a joint life insurance policy provides coverage for both spouses. Joint life policies are available as first-to-die policies or second-to-die policies. A first-to-die policy pays the surviving spouse the death benefit after the first spouse dies.
A second-to-die or survivorship policy pays the beneficiaries, such as children, the death benefit when both spouses pass away. Joint life insurance policies tend to be less expensive than multiple individual ones and can help minimize taxes after you both pass on.
Individual life insurance
With individual policies, when one spouse passes away, the surviving partner can receive the death benefit. Separate policies allow each spouse to focus on their unique needs in a policy.
When should married couples get life insurance?
Life insurance for married couples can be a worthwhile investment in the following circumstances
1. One partner is the primary earner
If only one spouse works, life insurance is very important. Should they pass unexpectedly, the surviving spouse will likely struggle without that income. A life insurance policy provides financial protection so the surviving spouse can maintain their lifestyle and support dependents if a primary earner passes away.
2. You have debts
Debts like a mortgage, car payments, or student loans don’t just disappear when you die — especially ones in both spouses’ names. A death benefit can help a surviving spouse repay these debts if the other dies unexpectedly.
3. You have significant living expenses
Life is expensive. From gas and groceries to utilities and a mortgage, a surviving spouse may struggle to maintain the same lifestyle after their partner dies. A death benefit can help cover living expenses as they adapt to a new life.
4. You want to help cover final expenses
End-of-life costs, like medical bills and funeral costs, can be costly. A death benefit can help reduce the impact of these expenses.
5. You’re planning to start a family
Children raise your living expenses significantly, which makes it even more important to have added financial security. Life insurance can help cover childcare expenses in the event of a spouse’s unexpected passing.
The bottom line
A death benefit can help you with end-of-life costs, provide for dependents, and help a surviving spouse with living expenses when a partner passes on. Life insurance for married couples can also make it easier to pass an inheritance on to children while helping to lower tax obligations.
The right life insurance for you depends on your particular needs. If you want to pay competitive premiums for a certain amount of time, term life insurance may be right for you.
If you want a more open-ended life insurance plan that accounts for the unknown, whole life insurance likely makes more sense. In either case, discuss your goals and options with your spouse and shop for policies together to help ensure your beneficiaries and one another are protected.
