Term life insurance for married couples

Term life insurance for couples

Whether you are newlyweds or have been married for years, there are many situations in life in which rethinking your finances and the safety nets you have is important. A term life insurance for couples is a trusted way you can make sure you’re both financially protected, if unforeseen happens to you. 

 The basic guideline for determining whether you need term life insurance is this: If you rely financially on your spouse’s income to maintain your lifestyle, then you should have life insurance. If one spouse is the primary earner, the other may struggle financially without the support their spouse provides. A good example is covering the mortgage on a home. Often both spouses’ income is needed to comfortably make the monthly payments. If one passes away, the other may struggle to afford to stay in the home. Term life insurance is designed to cover these exact types of scenarios.

 There are two ways you can generally get life insurance as a couple: joint life insurance covers both of you on one policy, or you can get separate policies for each of you. Here are the differences:

Joint term life insurance for couples

Joint life insurance, sometimes called survivorship life insurance, covers two people with one policy. It can pay the death benefit either when the first person in the couple passes away or after both pass away. While it may be possible to get term life insurance jointly, it is rare because joint life insurance is best used for estate planning or covering spouses who don’t qualify for their own policies. Therefore, a joint life insurance policy is far more likely to be whole life or permanent life insurance. If a single policy covering both of you is what you’re looking for, read our article on joint life insurance for married couples.

Separate term life insurance for couples

The remainder of this article will focus on the other way to get protection: individual term life insurance policies on one or both partners in a couple. Since term life is designed to cover only a set period, it is mostly used for very specific purposes, so separate policies often make sense. There are many benefits to structuring your protection this way. It generally covers more potential outcomes. You have greater flexibility and choice in the policies you can shop for, and they can be tailored to your needs and goals. 

Life insurance if you’re in a domestic partnership

You don’t have to be legally married to apply for life insurance and gain the advantages of financial security for you and your partner. New York Life recognizes all domestic partnerships that are established in accordance with applicable state law. For joint policies, you may need to supply additional proof of interdependence, but you are free to name any beneficiary you like with separate term life policies. 

Benefits of term life insurance for married couples

Term life insurance is generally more affordable than whole life insurance of the same coverage amount. It offers a guaranteed benefit for a specific length of time (usually 10, 15, or 20 years) and does not accumulate any cash value. It is simply designed to help you protect your family when they might be financially vulnerable, should something happen to you. Coverage amounts and premium costs can vary depending on your needs. You can estimate how much term life insurance you need here. The main uses of term life insurance for couples are:

Financial security

Finances and budgeting can be stressful on a family, even in the best of times. If you and your income weren’t in the picture, how would your spouse fare alone with the costs of daily life? Term life insurance is a failsafe against that lost income and can help give peace of mind that they will have the financial support to continue their lifestyle for many years. That security is one of the most important last gifts we can give our family when we pass away.

Covering debts

A mortgage, education debt for a child, or even car payments could be a good reason to consider term life insurance. If your spouse would have trouble paying these debts without your income, then you can purchase a term life policy covering the outstanding amount.

Final expenses

The average cost of a funeral in the U.S. is now over $8,000.¹ Final expense insurance, sometimes called burial insurance, is a small policy that aims to cover the costs of a funeral and other last needs. Such a policy can easily fit your budget and help your family during a difficult time. 

Think about a Backdoor Roth IRA

For high-income earners who can’t contribute directly to a Roth IRA due to the income limits, a Backdoor Roth IRA might be a smart move. It allows you to contribute to a traditional IRA first then convert that money to a Roth IRA. There are yearly contribution limits set for IRAs, though you can contribute more through catch up contributions if you’re 50 or older. You’ll pay taxes on the converted amount, but then on, your money can grow tax-free. 

When should a married couple consider buying term life insurance?

Often, something important happening in your life causes you to rethink your financial support system. These big life events are natural points for reevaluating what is important to you and your family and how term life insurance can help protect you. Consider exploring your term life options when you:

Get married

There are many exciting moments as you get married, but there’s also a lot of work to do. Combining finances and setting budgets are important steps toward joining your lives together. When you take this step, review each other’s finances and debts and decide how best to protect your family should something happen to one of you.

Buy a home

Buying your first home is a momentous occasion for any young couple. Upgrading later when your family expands is just as much of a milestone. Mortgages are a huge financial step and one that should absolutely be protected. Term life can be purchased to cover the amount you owe on your home loan, so that no matter what happens, the surviving spouse does not have to worry about losing the home. One common option is decreasing term life insurance, which lowers the benefit amount over time in step with how much you still own on your home loan.

Have a child

Raising a child is one of the most rewarding things you can do, but it’s also very expensive. It’s common to get a term life insurance policy to provide coverage on parents for a child until they are financially independent. For example, a 20-year policy on both parents can help ensure that childcare costs, clothing, and school are accounted for, financially protecting your child until they are ready to strike out on their own.

Start a business

Taking the exciting step to start your own business comes with many opportunities and challenges. You will likely want to consider various products like individual disability insurance and term life insurance to protect your investment in yourself and your family. If any of these situations apply to you, reach out to a financial professional and discuss your options for term life insurance or other products to ensure that your family stays protected.

Term life for couples FAQs

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