Spouse Life Insurance: Why Buy It?

Shawn Plummer

CEO, The Annuity Expert

Spousal life insurance is a form of life insurance that covers an individual’s partner or spouse. For example, suppose you are the named beneficiary of a spouse’s life insurance policy, and their death results in financial loss to you and your family. In that case, you will likely get the money from their life insurance policy payout.

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What Is Spouse Life Insurance?

Spouse life insurance ensures that if something happens to either spouse, the other spouse will be okay financially. It is a simple and affordable way to do this.

It doesn’t matter if one spouse or partner earns an income. For most families, both spouses contribute in other ways, like by providing services or helping out with the children.

If your spouse were no longer in the picture, you would have to pay for housekeeping, laundry, meals, and transportation for the children.

If your spouse or partner died, life insurance would give you the money to hire people to do the things they used to do every day.

Why Purchase Life Insurance On Your Spouse?

When you think about the income and services your spouse provides, it can be hard to figure out how you would finance replacing that income or paying for those services if something happened to your spouse.

  • Income Replacement – Most family members work to provide money for living expenses. This includes mortgage or rent, normal living costs, and debt payments. People also save money for college tuition and their retirement.
  • Household Services Replacement – Usually, when a couple has children, they do household tasks, or one of the spouses does most of the chores. If one spouse dies, the other must do all the chores themselves or hire someone to do it for them. This includes taking care of kids, getting them to and from school and daycare, providing meals, doing laundry, and many other things.
  • Planning for College, Debt, and Retirement – When two people share income, they usually share expenses too. For example, most couples will both make sure the other person can pay the mortgage and car loans if one of them dies. And when one spouse dies, the other is responsible for the family’s debt and future costs, like college and retirement. This is true even if only one person works. That’s why you should always consider getting life insurance for your spouse from day one.

Do Both Spouses Need Life Insurance?

Almost everyone should buy life insurance. If you have a lot of money saved up, it might make sense to spend some of that money on life insurance, but it is usually better to keep that money saved so you can have a comfortable retirement.

If you think about it, it doesn’t make much financial sense to trade off the interest you would lose if your assets were unavailable for a term life insurance policy.

If you consider the interest lost when an asset is made unavailable versus the premium for a term life insurance policy, the trade-off doesn’t make good financial sense.

Another thing to consider is that many parents want their children to have better opportunities than they did. Unfortunately, this usually starts with a college education, which can be expensive even if the child gets scholarships.

5 Ways To Buy Life Insurance For A Spouse

There are five different ways to get affordable life insurance for your spouse:

Group life insurance through your employer 

In most cases, a spouse employed full-time can get life insurance from their employer. The insurance is either free to the employee or provided at a heavily discounted rate.

One of the benefits of getting life insurance through your job is that there is little underwriting involved. This means that the insurance company will not consider your health when deciding whether to give you a policy.

Many companies will restrict the amount of coverage they are willing to pay to a multiple of your yearly salary (1 or 2 times) depending on your seniority and job title.

A spousal rider

Typically, if you are an employee of a company, you can add your spouse to your life insurance policy for a discounted rate. This is called a spouse rider. Most companies offer this benefit.

There are limitations on how much insurance you can have on your spouse. Usually, the additional insured must be married to the primary insured.

Life Insurance Marketplace

Often, it makes more sense to buy insurance in the open marketplace than through an employer. Most group life insurance policies are not portable (you can’t take them with you if you leave your job).

If you want more life insurance than your employer offers, it might make financial sense for you and your spouse to buy a policy from a private insurance company. This is because private companies usually offer more policies than employers do.

You can easily shop for an affordable life insurance policy online at annuityexpertadvice.com. You can also contact an insurance professional to help you buy a life insurance policy. The Annuity Expert is an independent insurance agency representing many different life insurance companies. It can give you quotes from each company with minimal information required.

The Annuity Expert can offer life insurance policies in the United States. These policies can be traditional, no medical exam or guaranteed issued.

Separate individual life insurance policies

Many couples have chosen to have different life insurance policies. For example, some couples prefer to mix cash value policies with term policies to reduce their total cost of life insurance while also building up a cash value that earns interest.

Some couples prefer to have their life insurance policies instead of getting life insurance through a spousal rider. This is because they don’t want to accept the limitations of getting life insurance this way.

Joint life insurance policies 

Joint life insurance is a policy that covers two people and is popular for couples. However, it is not always the cheapest way to purchase coverage.

Joint life coverage is a type of permanent life insurance. This means the coverage will slowly build up cash value over time, and the interest earned on this cash value is tax-deferred.

Most policies have optional riders that can be added for an extra fee. This allows the applicant to have more coverage and benefits.

There are two joint policies: first to die and second to die.

  • First to die means that when one person dies, the company will pay the death benefit to the other person listed on the policy. As of now, it can be hard to find this type of policy.
  • The second-to-die policy is different because the insurance company will not pay the death benefit until both people insured on the policy have died. As a result, this policy is set up to benefit the survivors, usually the children, rather than a spouse who is insured on the policy.

Separate Vs. Joint Life Insurance Policies

There are two main ways to get life insurance for your family. One is buying a policy for each spouse or partner. The other is getting a joint policy. A joint life insurance policy can be better in some cases.

Joint life insurance policies usually offer permanent coverage, and in some cases, it may be cheaper than getting separate permanent policies.

Joint coverage is usually only offered to married couples or domestic partners.

Another thing to think about when choosing a life insurance policy is whether a first-to-die or second-to-die policy would be better for you.

A first-to-die product will be the best option if you want your spouse or domestic partner to get the money when you die. On the other hand, a second-to-die policy will be better if you want the death benefit to go to somebody else, like your kids.

When shopping for insurance, talk to one of our agents about your needs and situation. This will help you get the best advice on which policy would be the best for you.

What Type Of Life Insurance Policy Is Best For You And Your Spouse?

Term Life Insurance

Term life insurance is likely to be more affordable than permanent insurance. Permanent insurance usually has a higher monthly premium.

Accidental Death Insurance

No life insurance costs less than term insurance. The only exception is an accidental death policy, which provides limited coverage.

Whole Life Insurance

A whole life insurance policy is permanent, meaning the insurance company cannot cancel the policy as long as you keep paying your premiums. The premiums also help build a cash value account, which earns tax-deferred interest.

You can access the money in the cash value account through policy loans, cash withdrawals, or surrendering the policy for cash.

Key Steps In Buying Spouse Life Insurance

Buying a spouse’s life insurance is like buying life insurance. There are four important things you need to think about:

Figure out how much insurance you need

You need to figure out how much life insurance coverage you need before you buy it. This will depend on your circumstances and budget.

You need to think about what you need in case something happens. For example, you and your spouse may not have enough money if something bad happens if you don’t plan.

Decide on the type of spouse insurance.

Remember, term insurance is temporary. You don’t get any money back when you’re done with it.

Whole life insurance is more expensive than other types, but it lasts a lifetime. You can also access the cash value that you have saved if you need it. Therefore, whole life insurance can be seen as an asset.

Determine if a medical exam is needed

Today, many insurance companies offer life insurance without a medical exam. However, this does not mean they are accepting a risk because technology has made it possible to learn about your current and historical health by accessing a national database known as the MIB.

Many life insurance policies don’t require a medical exam.

Choose a Beneficiary

There are many people you can choose to receive your money when you die. For example, you can choose your spouse, your children, or a charity.

You should choose your beneficiary based on your insurance needs and update it when needed. You can choose as many beneficiaries as you want, and you can also choose contingent beneficiaries in case your primary beneficiaries die before you do.

Life Insurance For Stay-At-Home Spouses

People who don’t work still provide important work. This includes taking care of their children and doing housework. This would normally need to be done if they weren’t around.

Even if someone doesn’t work, they still need life insurance.

Different couples need different life insurance policies. Experienced professionals can help you find the best policy for you and your spouse. They will look at your individual needs and make a plan that fits you both.

Spouse Life Insurance Insurance Companies

  • AIG: Allows a stay-at-home spouse to purchase up to $1,500,000 of the working spouse’s coverage.
  • Spouse Life Insurance: Allows a stay-at-home spouse to purchase up to $2,000,000 in coverage.
  • Lincoln Financial: Allows a spouse who does not work to get coverage up to the same amount as the working spouse.
  • Pacific Life: Allows a stay-at-home spouse to purchase up to 100 percent of the working spouse’s policy. The limit for this is $3 million for people 70 years old or younger.
  • Principal: Allows a stay-at-home spouse to purchase up to $1,000,000 of the working spouse’s coverage or up to $2,000,000 with extended terms and conditions.
  • Prudential Life Insurance: This allows a stay-at-home spouse to purchase up to 100% of the working spouse’s coverage. The maximum coverage will be considered on a case-by-case basis.
  • Mutual of Omaha: This allows a stay-at-home spouse to purchase coverage that is equal to the working spouse’s coverage, but there is a limit of $2,000,000.

How to Buy Life Insurance for a Spouse

There are three primary ways to get a life insurance policy for your spouse.

Life insurance through your employer (Voluntary Spouse Life Insurance)

If your employer has a group life insurance plan for staff, there’s a good chance you can join your spouse in it as well. The main drawbacks are that company-sponsored life insurance plans are frequently modest in value, and if your job ends, so does your policy.

Add Spousal Coverage To Your Life Insurance Policy

A “rider” is a life insurance policy supplementing that can expand the coverage in several ways. For example, some insurance companies may not offer spousal riders, and specific health issues might prevent your spouse from taking them.

Purchase An Individual Policy For Your Spouse

You may get free quotes for your spouse’s life insurance from various companies if you contact them via the internet. Some of these alternatives might even be “no medical examination” policies, which means your spouse won’t have to undergo any tests to obtain coverage. Instead, the policy could be issued depending on the applicant’s responses to health questions requested during the application process.

Life Insurance For A Spouse

Need Help Getting Life Insurance Coverage?

Contact us if you need help purchasing a life insurance policy. The service is free of charge.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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