What Is Spouse Life Insurance?
- Spouse life insurance is life insurance coverage purchased for a spouse or domestic partner. Explore the basics of spouse life insurance policies and riders.
People purchase life insurance to make sure their families will be taken care of financially if they die, but what many individuals fail to consider is what happens if their spouse dies first. Spouse life insurance can provide an additional level of protection for families who want to ensure the financial stability of their household. Explore the basics of spouse life insurance policies and riders, and discover if this type of policy can be beneficial to your household.
What Is Spouse Life Insurance?
Essentially, spouse life insurance is life insurance coverage purchased for a spouse or partner. Depending on the type of insurance you purchase, spouse insurance may cover a husband, wife, common-law spouse or domestic partner. It differs from traditional life insurance plans in that you don’t purchase the policy yourself. It’s purchased by your partner or spouse, who is usually the primary beneficiary.
Spouse life insurance may fall into the category of dependent life insurance, which typically provides substantially lower coverage than standard individual policies. In some cases, this coverage may be purchased as a rider, which is added to an individual life insurance policy at the time of purchase, providing supplemental coverage for specific needs. Spouse insurance may also take the form of a first-to-die joint policy, which pays a death benefit to the surviving partner after the death of their spouse.
How Does Spouse Life Insurance Work?
Spouse life insurance is purchased by one partner to cover the other. Before buying a policy, you’ll need to decide whether you want term or permanent life insurance and the amount of coverage you need. If you’re opting for a term life plan, you’ll also need to choose the duration of coverage.
During the purchase process, you’ll go through underwriting steps to assess your spouse’s risk profile. That lets the company verify that your spouse is eligible to be insured and decide how much it will cost for coverage. You may need to provide evidence of insurability, and a medical exam may be required for your spouse. Premiums are then assigned and must be paid according to contractual terms. Unpaid premiums may result in termination of your policy.
As long as premiums are paid, coverage continues until the end of the term, if applicable, or until your spouse passes away. If your spouse dies during the effective coverage period, a death benefit is paid to the named beneficiary. If your spouse outlives the coverage period of a term plan, the policy expires and benefits are lost.
Where Can I Purchase Spouse Life Insurance?
If you're thinking about purchasing spouse life insurance, policies are typically purchased through one of the following channels:
- Through the workplace: If your employee benefits include life insurance, you may be able to purchase spouse life insurance directly through your workplace. Employer-sponsored group plans are often a great option for consumers because they’re typically less costly than privately purchased individual plans, although they may provide less flexibility when it comes to coverage options.
- From a private company: Spouse coverage may be purchased directly through a life insurance company. Many insurers now provide simple ways to buy policies online or over the phone. This may be a good option for consumers who maintain multiple insurance policies with a single provider, as bundling several policies may result in lower premiums.
- Through an insurance broker or agent: Agents and brokers are a good bet if you want help shopping around. These industry professionals can compare carriers and plans so that you find a policy that suits your unique needs and fits in your budget.
- As a rider to your life insurance policy: If you’re purchasing individual life insurance for yourself, some plans let you include a rider that provides spousal coverage. Although this coverage is usually lower than you’d get with a standalone spouse life insurance plan, it’s also less expensive. Spousal insurance riders are usually added on when the base policy is purchased, and they expire when the base policy expires.
Should Both Husband and Wife Have Insurance?
Although many households only opt to purchase life insurance coverage for the family’s primary breadwinner, arguments may be made for insuring both husband and wife. Ultimately, the decision of whether to purchase life insurance for one or both spouses should be based on the personal, financial and budgetary needs of your household.
It may be helpful to consider the following questions when deciding whether to purchase life insurance for more than one member of a household:
- Do both spouses contribute equally to household income? If the answer is yes, it may be worthwhile to insure both partners. Looking at the distribution of income may also help you determine how much coverage to purchase for each individual.
- Does one spouse serve as a caregiver to children, aging parents or special needs adults? A spouse who provides childcare or performs other crucial domestic tasks may contribute to a household without bringing in an income. If that spouse dies, those needs must be filled another way, potentially adding to the household's financial burdens. A spouse life insurance policy can help offset these costs.
- Are you married? If not, you may have to provide proof of insurable interest before you’ll qualify for spousal or dependent life insurance. That means if you aren’t legally married and want to purchase life insurance coverage for your partner, you must prove that you’ll experience financial hardship if they die.
- Can you afford burial expenses? If you wouldn’t be able to afford funeral and burial costs for your spouse, a small spousal life insurance policy can help cover final expenses.
What Are Joint Life Policies?
Many life insurance companies offer joint life insurance options. In most cases, these policies are only available to married couples or those in a domestic partnership.
Joint life policies may be less expensive to purchase than separate individual coverage. They may also be an ideal way to secure coverage if one spouse has difficulty qualifying for an individual policy. However, joint policies are typically less flexible than individual plans and don’t offer the same level of customization.
Most insurance companies offer two types of joint life plans:
- First-to-die policies, which pay out after the first spouse dies
- Second-to-die policies, which pay a death benefit to a designated beneficiary after both spouses pass away
Can I Take a Policy Out on My Spouse Without Their Knowledge?
No. Purchasing life insurance coverage for your spouse without their knowledge is illegal. If you plan to purchase a life insurance policy on another person, you must get their consent and their signature must appear on the policy. Signing on their behalf, even if they’ve given you verbal permission, is considered insurance fraud and may have serious legal consequences. A reputable financial professional can provide additional advice and guidance on the legalities of taking out a policy on your spouse.