What Most People Don’t Know About Insuring Their Spouse

What Most People Don’t Know About Insuring Their Spouse

For many people that are researching life insurance for the first time, there are a lot of questions regarding whether or not they can purchase life insurance for their spouse. Yes! Making sure that both of you are covered is crucial! So, if you have some questions about this, take a few minutes and read the article below, where we have outlined many of the most common questions and concerns that people have regarding buying life insurance for their spouse.

When Purchasing Life Insurance for Your Spouse, How Involved Will They Be in The Application Process?
The reality is that if you want to purchase life insurance for your spouse, they have to be on board. Not only that, but they have to be available to provide any additional information necessary that you might not know the answer to.

Buying life insurance can be really hard. Thinking about something happening to either you or your spouse, thinking about your children growing up without one of their parents, it isn’t an easy thing to do – for anyone. But it is necessary. So, it’s vital that you and your partner are on board for the application process together.

If you are not sure, ask yourself these questions: Will your husband or wife be open to doing a phone interview of their health history? If your answer is “Probably not.” Then the amount that they will qualify for will be significantly lower than if the answer was “yes.” At the very least, they will need to sign for the application.

What are the Surviving Spouse’s Financial Responsibilities?
A lot of people are surprised to find out that they are responsible for their spouse’s debt at the time of their passing. The fact is that all debts are due at the time of someone’s death…this means that if you are unable to pay your deceased spouse’s outstanding debt, then creditors have the right to pursue legal action – against you. Unfortunately, this is a common cause of bankruptcy.

This situation applies to a mortgage, a car note, medical bills, any debt that is outstanding. This is the reason why so many financial advisors advise purchasing insurance on your spouse and vice versa. Doing so will provide your family with a sort of safety net.  While doing this does not mean that you will necessarily be better off from a financial standpoint it does allow survivors to maintain their regular standard of living.

Protecting Your Family From Loss of Income
The most common reason for buying life insurance on a spouse is to replace their income. Say for example you are a stay at home mom and your husband brings home $3,500 after taxes every month. If something happened to your husband and he passed away your family would be without that $3,500 a month to pay for your home, utilities, car, gas, food…etc…

Buy Young and Pay Less
Insurance companies use tools called “income multipliers” when determining how much someone is expected to make throughout a timespan. For example, at the age of 35, most people have another 30 years of work ahead of them. Knowing this an insurance company will then allow someone of this age to purchase a policy that would replace approximately 30-years income.

Now, if you are older, say you are 70, odds are the insurance company will restrict the amount of coverage you can buy. Generally, this ends up being between 5-10 times your annual income.

Life Insurance To Secure Paying for Your Children’s College
Another common reason that people purchase life insurance for their spouse is to provide their children with money for post-secondary schooling. It’s hard enough to put aside money on a regular basis for our children’s college funds once all bills are paid. But if your household income suddenly dropped or was reduced to zero? In order to ensure that your children are taken care of when it comes to college or university many people opt to purchase life insurance for this purpose.

Covering Burial and Funeral Costs
This is perhaps the most common reason that people buy life insurance for their spouse. Funerals are expensive. So expensive that the average funeral and addition “final expenses” in American cost on average upwards of $15,000. This is not exactly money that the average American has lying around in their checking account.

Another popular question is, “can I buy life insurance for my mother/father?” The short answer?  Yes. The long answer, however, is that while you can there is a separate set of guidelines that have to be followed in order to do so. It needs to be pointed out that in order for this to happen your parent needs to be involved.  This means that if they are not willing or able to speak with life insurance professionals with us by phone and provide legal authorization of the purchase it can’t happen.

Am I Allowed to Purchase Life Insurance on My Spouse To Protect Our Estate For Our Children?
Life insurance is often used for estate protection, as well as to cover estate taxes. There are many spouses who purchase life to cover estate taxes, as well as to ensure that they are able to keep their wealth assets intact.

Insurance For My Stay-At-Home Spouse
My spouse stays at home with the kids, can I purchase life insurance on them?

Yes, you definitely can!

Most insurance companies feel that a “stay-at-home” parent is just as important as one who goes out and earns a full-time income. This is because without that stay at home spouse the family would be forced to pay for costly things like childcare, house cleaning, transportation, laundry services and more. Because of this, stay at home spouses need to be covered – and covered well.

A recent survey from Salary.com finds that the “salary” of stay at home parents would equate to more than $150,000! Should a stay-at-home spouse die, the remaining parent would have to suddenly pay for all of the jobs that the stay-at-home spouse was already doing?

Don’t Add Your Spouse as an Insurance Rider
Regardless of the reason for life insurance, it is much better for each spouse to have their own should they both qualify.

Although the idea of having one policy might seem easier. After all, it means only one monthly premium payment, right? Not only that but attaching a rider to your policy is often significantly less expensive than 2 separate policies. True. But the problem with this is that the majority of the policies with a spouse rider has what is referred to as a reduced benefit for the surviving spouse. This means that if your spouse dies leaving you a single parent, you would likely need more life insurance to be adequately covered as opposed to less.

Additionally, the life insurance policy ends if either party dies. This means that if the surviving spouse is in poor health at that time, they could find themselves in a position where they could not find new, affordable life insurance.

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