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If you’re shopping for life insurance, you probably recognize the need to have a financial safety net for your family. But if you’re married, your safety net might not be complete unless your spouse also has a life insurance policy. Spouses can save time and hassle by shopping for policies together to protect their family’s future.
Whether you’re shopping for life insurance alone or with a spouse, there are a few things you always have to do. This includes:
Calculating Your Life Insurance Need
It’s important to know how much life insurance you actually need, in terms of both coverage amount and term length. The best way to take to this is to take a needs-based approach and calculate your financial obligations. This involves taking into account:
- College costs
- Childcare and care for other dependents (like aging parents)
- Debt (unfortunately, co-signed debt survives even death)
- End-of-life expenses (e.g., funeral expenses)
- Financial cushion for the family (e.g., replacement income) See here for more information on how much life insurance you need. You can also use Policygenius’ life insurance calculator for a tailored coverage recommendation.
Choosing A Beneficiary
The beneficiary is who will receive the death benefit in the event that the policyholder dies. Most spouses shopping together will choose their partner, but you may choose your children or even an institution, like a charity or museum. Policyholders can choose multiple beneficiaries, or pick a primary beneficiary and a contingent beneficiary. Learn more about life insurance beneficiaries.
Deciding Between Term vs. Whole Life Insurance
You will also need to decide if you need a term life insurance policy or a permanent policy, like whole life. Term insurance is cheaper but expires after a certain number of years; whole is more expensive but doesn’t lapse and includes an interest-gaining cash value component. Term insurance will be the right choice for most shoppers. Learn more about the differences between term and whole life insurance.
Picking A Company
Depending on the health status of both you and your spouse, you should take into account what insurance companies you’re considering. Some are better than others at accommodating health conditions like diabetes or high cholesterol and provide lower premiums for applicants with those conditions. Choose the best life insurance company for you and your spouse to save on both policies.
Separate vs. Joint Life Insurance Policies
One unique factor in shopping for life insurance with a spouse is the decision to buy two separate policies — one for each of you — or a single joint policy that covers both of you.
Separate Life Insurance Policies
The most common way for spouses to buy life insurance is to buy two separate policies at the same time. Unfortunately, while this bulk purchase doesn’t result in lower premiums, there are still some benefits:
- You can tailor each policy to each spouse’s needs. For example, you may want the breadwinner to have more coverage than a stay-at-home spouse, or you may want only one person to have riders that offer extra provisions, like early access to the death benefit.
- Using Policygenius, you can save time during the application process. Once you fill out all of your identifying information and choose a policy, you can immediately start on getting your spouse’s quotes. You’ll need the same information for him or her — health history, government ID like drivers’ license or Social Security number, and any other life insurance policies — to make the process seamless.
- You can schedule a joint medical exam. This is part of the underwriting process, when a medical examiner will perform a physical to get an idea of your current health. You can have the technician come to your home or place of work at your convenience.
Joint Life Insurance Policies
A joint life insurance policy is one policy that covers two people. They can be term or permanent policies. The main consideration is if you want a first-to-die or survivorship policy.
- In a first-to-die joint policy, the policy will pay out upon the first policyholder death. If the surviving spouse wants coverage, they’ll need to apply for another policy.
- With survivorship life insurance, also known as a second-to-die policy, the policy doesn’t pay out until both policyholders are deceased. Both types of joint policies have benefits and drawbacks. First-to-die policies are typically more expensive, but survivorship policies don’t work as well as income replacement since both policyholders must be deceased before they pay out. Learn more about joint life insurance policies. Separate term policies are typically the best option, because they’re cost-effective and provide flexibility in terms of how long each policy lasts and what customizing riders each policy has. But joint life insurance can be convenient because there’s only one policy throughout the process. The best life insurance for married couples will depend on the individual circumstances, so you should talk to a licensed expert about whether separate policies or a joint policy is right for you and your spouse.
Life Insurance For Stay-At-Home Parents
Stay-at-home parents don’t provide direct income, but they do provide childcare and take care of the home’s budget, food supply, and more. This should be taken into account, and is a great justification for a life insurance policy. Would you be able to afford all of the tasks your significant other does for free? Some stay-at-home parents may be able to get life insurance coverage by buying what’s known as a rider on their spouse’s policy. Depending on the type of rider, you may be able to get the same coverage through one policy. There are downsides to this approach, however – not all spousal riders offer the same coverage, and some are more expensive than just buying a standalone policy. A spouse without an income can usually qualify for 50% of the bread-winning spouse's coverage.
Can you take out a life insurance policy on your spouse?
One final consideration: Can you buy a life insurance policy for your spouse without involving them, or vice versa? The answer is no, because there are several hurdles involved. First, if you’re taking out a life insurance policy on someone else, you need to demonstrate insurable interest — that is, proof that you would be financially burdened if that person died. It’s what allows business partners to take out policies on each other. Second, you’ll need to get through the entire underwriting process. That means knowing all of the person’s health and identifying information. Even if you have all that, you’d need to apply for a no-medical exam policy or else the person will have to take the paramedical exam. Finally, the person would need to sign the policy and give consent. Unless you’re willing to commit fraud, you’ll need to bring your spouse into the process at some point.
This article originally appeared on Policygenius.