Best Life Insurance for Married Couples

Marriage brings about many exciting changes, from blending households and sharing responsibilities to setting long-term financial goals. As you begin this new chapter, it's essential to ensure both you and your spouse are financially protected, especially if you have dependents or significant financial commitments. 

One of the most important steps in securing your financial future is obtaining the right amount of life insurance coverage for both individuals in the relationship. Whether you choose separate policies tailored to each person’s needs or opt for a joint life insurance policy, it's vital to consider how each option can best support your family. This guide explores both individual life insurance policies and joint policies, helping you make an informed decision about the most appropriate coverage for you and your spouse.

Why Married Couples Need Life Insurance

Life insurance is a crucial financial tool for married couples, providing protection and peace of mind in the face of unexpected events. As a couple, you likely share responsibilities such as a mortgage, car loans, or other debts, and life insurance ensures that these obligations won't fall solely on one spouse if the other passes away. Without adequate coverage, the surviving spouse could be left with a significant financial burden, affecting their quality of life and long-term financial security.

Additionally, if you have children or dependents, life insurance can offer vital support by covering everyday living expenses, healthcare costs, and education. A policy can ensure that your family continues to maintain their lifestyle and plan for the future without the loss of income from the deceased spouse.

Even for couples without children, life insurance plays an important role in securing your financial future. It can help cover end-of-life expenses, provide income replacement, and even leave behind a financial legacy. By having life insurance in place, married couples can feel more confident knowing they are prepared for the unexpected, allowing them to focus on building their lives together while ensuring that both partners are financially protected.

Types of Life Insurance for Married Couples

Unlike an individual shopping for life insurance, shopping for a life insurance policy with a spouse brings in the option of a joint life insurance policy. Learn more about the advantages and challenges of both a joint life insurance policy and individual life insurance policies.  

Joint Life Insurance Policies

A joint life insurance policy covers two individuals under a single policy, typically used by married couples or partners. It provides financial protection to the surviving spouse in the event of the first spouse’s death, with two main types of payout options available and pros and cons for this type of coverage. Here’s a look at some of the pros and cons of joint life insurance coverage:

• Pros: Joint life insurance policies come with both advantages and limitations. One of the primary benefits is lower premiums compared to purchasing two individual policies, making it a cost-effective solution for couples. Managing one policy is also simpler and more convenient than managing two, streamlining the insurance process for both spouses.

• Cons: A joint policy can also present some drawbacks. For example, a First-to-Die policy leaves the surviving spouse without coverage after the first death, requiring them to apply for new insurance, which could be more expensive or harder to secure as they age. Additionally, a joint policy may not allow for changes to the coverage after it's in place, such as adjusting the beneficiary or individual coverage amounts.

Depending on your needs, a joint policy can be an affordable and efficient way to secure life insurance for both partners, but it’s important to understand how the policy works and whether it’s the best fit for your financial goals.

Separate Individual Life Insurance Policies

While joint life insurance policies can be a cost-effective solution for married couples, separate life insurance policies often offer more flexibility and are tailored to the individual needs of each spouse. With separate policies, each person’s coverage can be customized based on factors like income, health, job responsibilities, and long-term financial goals. 

Separate policies typically provide individuals with more control, allowing each spouse to adjust their policy as their personal or financial circumstances change. Here’s a look at some of the advantages and disadvantages of this option for married couples:

• Pros: Separate life insurance policies offer greater flexibility, allowing each spouse to select a policy that aligns with their individual needs and financial situation. This ensures that each person is properly covered, whether they are the primary breadwinner or have fewer financial obligations. Additionally, separate policies offer more control, as each spouse can adjust their coverage as their personal or financial circumstances evolve.

• Cons: While separate policies are often more affordable and flexible, they may come with additional administrative tasks, such as managing two separate policies and remembering to pay two premiums. Furthermore, if both spouses are in good health, they may qualify for better rates individually than they would under a joint policy, but the overall cost could still be higher than a single joint life insurance plan.

An alternative to a joint policy, a spousal rider is an add-on to one spouse’s life insurance policy that extends coverage to the other spouse. This rider allows the primary policyholder to cover both themselves and their spouse under a single policy, often at a lower cost than purchasing an entirely separate policy for the second spouse. The benefit of a spousal rider is that it provides a simple and affordable way to protect both individuals without the complexity of a joint life insurance policy.

Life Insurance Options for Unmarried Couples

Domestic partnerships need the same protections as couples who are married, but couples who aren’t married must prove insurable interest in order to list their partner as a beneficiary on their policy. A person has an insurable interest if, upon the death of an insured individual, that person would suffer a financial loss due to the insured’s death. 

Considerations When Choosing a Life Insurance Beneficiary

A life insurance beneficiary is the person or entity you name in your life insurance policy to receive the death benefit. It’s common to choose your spouse or significant other as your life insurance beneficiary when the time comes. 

You might also want to take into consideration a contingent beneficiary, in case your primary beneficiary is unable to receive the payout. It’s also important to review your life

What’s the best life insurance for married couples?

The best life insurance for married couples depends on why life insurance is being purchased in the first place. However, term life insurance is often the most popular option for both individuals and couples, as it’s simple, affordable, and you only buy it for as long as you need it. 

Understanding Payouts and Tax Implications

When it comes to a joint life insurance policy, there are two main payout structures: First-to-Die and Second-to-Die. In a First-to-Die policy, the death benefit is paid out when the first spouse passes away. The surviving spouse can use the funds for living expenses, paying off debts, or other needs. A Second-to-Die policy, on the other hand, pays the death benefit only after both spouses have passed away. This option is often used for estate planning purposes, as the death benefit can help cover estate taxes or provide an inheritance for children or other beneficiaries.

One key advantage of joint life insurance policies is the simplicity of a single payout structure for both spouses. However, understanding the tax implications of the payout is important. Typically, the death benefit from a life insurance policy is tax-free for the beneficiaries. The survivor of a First-to-Die policy will not owe taxes on the payout, which can be used to meet immediate needs without worrying about tax burdens. In a Second-to-Die policy, the tax situation remains similar—while the beneficiaries won’t owe taxes on the policy’s payout, the total estate may be subject to estate taxes, especially if the estate exceeds the exemption limits.

SelectQuote Can Help Find Life Insurance for You and Your Spouse

Buying life insurance is a way to ensure your family doesn’t suffer any financial burdens on top of the emotional challenges that come with losing a loved one. We can simplify the process of purchasing life insurance and help you better understand what policy might be right for you and your spouse.