Do both spouses need life insurance coverage?
Flowers and fancy dinners are nice, but few things say “I love you” more than financial security.
Whether at Valentine’s Day or any other time of year, relationships flourish on openness and trust, including the tough conversations. It’s important to make your financial future part of that conversation and to really think about the “until death do us part” of that promise to your partner.
As spouses, you depend on each other financially, especially if you have children together. And while you’re planning on many happy years to come, it could be devastating to your partner if something unexpected happened to you.
You might think of life insurance as something only one of you, typically the top earner, needs to carry. But in many cases, it’s smart for both partners to own it, even if one of you stays home. Here’s how to balance coverage and which type of life insurance to consider.
Should both spouses have life insurance?
One question that a lot of married couples deal with is, “Do we really both need to be covered, or is one policy enough?” What if one of you stays home, works part-time, or is a student?
In general, if anyone depends on you financially, you should be covered. About 58% of households are dual-income, which means losing either income could be tough for the surviving partner.
But even if one of you isn’t currently working, life insurance is all about insuring the future – and things can change. Life insurance for married couples gets more expensive the older you get, and you don’t want to miss the opportunity to protect your family and the life you’re building together.
Do stay at home spouses need life insurance?
You might not be working for pay, but stay-at-home parents are definitely working. While the support you provide your family is priceless, you can put a price tag on what it would cost to outsource some of those tasks.
For example, by one estimate, if you add up all of the child care, household upkeep, chauffeuring and other tasks that you do on a regular basis, the financial impact of you no longer being around has been estimated at a whopping $162,581 per year. Life insurance can help make sure your partner is able to cover these expenses and even take time off work if needed to focus on your family during a difficult time.
How much life insurance do we each need?
Not sure how to balance your coverage? There are different ways to go about it. Some spouses decide to take out the same amount of coverage to ensure financial security, no matter what happens. Others balance coverage depending on how much they earn.
Think about the life you’ve built together, from raising your kids to building a home, and what it would cost to continue supporting it. Add up things like day-to-day expenses, debts, child care costs, and saving for future plans, like college or weddings for your children. Our term life insurance calculator can help you crunch some of those numbers.
When you apply for life insurance, the life insurance company will consider your individual earnings to determine how much coverage you can buy. That said, spouses that stay at home can usually qualify for coverage based on their partner’s income.
What type of life insurance should we buy?
For most families, term life insurance is the way to go. It’s the most affordable and flexible life insurance option, and you can adjust the term length based on your needs. For example, if you just bought a house with a 30-year mortgage, you could time your policy to last as long as the mortgage.
With term life insurance, you can each buy an individual policy with your own coverage amount and length. Going this route can help you balance coverage between the two of you, based on your family’s needs and goals.
You can also buy life insurance together as a married couple, known as joint life insurance. These are usually permanent life insurance policies. Permanent life insurance is typically more expensive than term life, but it can make sense for special situations.
Joint life insurance options include second-to-die life insurance for both spouses, also known as survivorship life insurance, which pays out to either cover estate taxes or to leave a legacy for children after both partners have died. You can also purchase first-to-die spouse life insurance, which provides a payout after the first spouse dies to help the surviving partner pay bills or manage debt. It helps to work with a company like eFinancial that can help you shop and compare life insurance options.
Still have questions?
At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.