When two people take their vows to get married, death is the last thing you may want to think about. Yet either of them will inevitably die and leave their better half behind. If no proper plans are put in place, it can leave the surviving spouse without money.
If this was to happen, the spouse would find it difficult to continue leading a normal life. Luckily, there is plenty of life insurance for married couples that can lessen the pain.
They are designed to help the surviving spouse to move on. Term life insurance and whole life insurance policies were developed for this purpose. Also, you may consider first to die, final expense or second to die policies. They can provide the required financial support during this trying moment.
Life Insurance Options for Married Couples
The proceeds from the policies could pay for expenses such as house rent and car maintenance. They could also be used to pay for children education and cushion the family from financial trouble. Here are options you may need to consider.
Term Life Insurance
If you are looking for a policy to cover you for a specified period, then consider term life insurance. It could be the best option for you. It gives you the freedom to choose the duration of coverage ranging from 5 to 30 years.
It is a good basic policy that a couple that is just starting life may afford to pay for. The cover is ideal for a couple that has children to educate and mortgage to pay. It could even be used to fund funeral expenses when you lose your loved one.
Unfortunately, many breadwinners forget that they will not continue receiving paychecks as soon as they breathe their last.
When it happens abruptly, it gets the surviving spouse into debts. In some cases, the assets the deceased has taken time to accumulate may need to be disposed of to meet the expenses.
Fortunately, you will not get here if you have a term life policy. It fills the gap and will help you sort out most of those issues. The good thing about this policy is that it allows you to select the amount of coverage you want. It means that you can determine the number of premiums you can afford to pay. Upon your demise, the policy will provide a lump sum payment to the beneficiaries.
Whole Life Insurance
This is permanent life insurance that provides coverage for one’s entire life. The policy will deliver on all its promises as long as the premiums are paid as required. That aside, the policy is popular because of the cash value feature.
It allows the cash value to accumulate over time and the amount can be used as collateral for a loan in the future. People who buy the policy and pay the premiums as required can grow the cash value to a large amount.
Some of them have used the cash value amount to supplement their income in retirement. It is thus the best life insurance for senior couples.
Here are the types of whole life covers to choose from:
- The interest-sensitive insurance- it’s a policy that gives interest to the accumulated cash value.
- Single premium- It is ideal for people with a large amount of money. It allows you to purchase a policy upfront.
- Traditional whole life cover- it guarantees a minimum rate on the cash value in the policy.
Whichever of the policies you decide to buy, you will be guaranteed to enjoy the following:
- Have part of the money you pay as premium go to build your cash value
- Pay the same amount of premium throughout the period you are covered
- Get a tax-saving opportunity
First-to-Die Life Insurance
Dying is inevitable.
As a result, the couple must prepare to take over expense payments when their partners pass away. The best way they can do this is by buying first-to-die life insurance.
Here are a few things you need to know about the policy.
It is a joint policy that will give the coverage you need when either of the spouses dies. The policy pays out the death benefit immediately a spouse dies. It guarantees to protect the children left behind when one of the couples dies.
The policy combines life insurance of the spouse to form a joint policy. The two parties are listed as the insured. What happens is that immediately one of the spouses dies, the surviving partner gets paid the benefits.
But, once the payment has been effected, the policy is terminated. It is an ideal policy that removes uncertainty in predicting which spouse will die first. It is cheap and does not cost as much as you would pay when each one of you takes a cover.
Also, it pays faster to enable the surviving spouse to pay for bills. This eliminates wastage. It is the best option in a case where the family requires just one death benefit.
Second-to-Die Life Insurance
Every one of us fears death. Unfortunately, it is inevitable. When it strikes, it can leave a financial burden to the heirs. They may find it difficult to meet their basic needs including the cost of tuition. This is the reason why the second to die policy was developed.
How Does it Work?
When you pass on, you leave all the assets you have accumulated behind. Also, your loved ones may be required to pay medical bills and taxes. This may be tricky for children. Thus, the policy ties any loose end that may exist.
It ensures that the beneficiaries don’t go through financial hardship. The policy can pay for estate tax and do many other things. The second to die policy will pay out when the surviving spouse passes on. It combines the lives of the husband and the wife into one.
The couple pays a single premium. It is cheaper than having two different policies where each of the spouses pays premiums. The premiums are low and affordable. Upon the death of one of the couples, the surviving partner will not have to pay hefty estate taxes.
Thus, there is no need to worry or think about selling the property to pay the taxes. The policy ensures that the taxes are settled as soon as the surviving spouse dies. Thus, it is a good way to protect an estate.
Final Expense Insurance
When a person dies, it is the wish of the people they leave behind that they rest in peace. But, this may not be the case when the immediate family cannot meet funeral expenses.
Which is why everybody needs to consider final expense insurance. However, we find that most of the people over 85 looks for this type of plan.
It is a cover that will pay your bills when you pass on. Costs such funeral expenses and medical bills can be a thorn in the flesh. It can cost thousands of dollars to the family.
So, you will be better off with a final expense cover. It ensures that you leave your family with enough financial backing to help them give you a decent burial.
Unfortunately, many people tend to think that they are immortal. They don’t see a good reason for buying this policy.
However, it is one of the policies that will ensure you get a decent send-off. Also, if the surviving family may need a trip abroad to scatter your ashes, this is the right policy they can rely on.
Now the cost of the final expense cover depends on the age of the insured. If you are old, it is unfortunate since you will pay more. The reason for higher premiums is simple; the risk of dying in old age is high. Also, the victim will not have contributed much to the policy by the time they die.
Features of Joint Life Insurance
Life covers are designed to ensure the life of the surviving spouse goes on uninterrupted even when the primary breadwinner passes on. But today, it is common to find both spouses earning. It necessitates for joint life insurance.
Such a cover has the following features:
It Covers a Non-working Spouse
If the spouse is not working but takes care of the family, a joint life cover will work for them. It provides cover against the death of either of the souse. It ensures that the surviving spouse has enough money to provide for the family. The insurance companies put a cap on the sum assured.
The Duration of the Policy
It continues to run even after either of the spouses dies. The surviving spouse is entitled to receiving the amount assured depending on the terms in the policy.
What happens when the two spouses die unexpectedly?
Well in such a case their nominee will receive the compensation. Also, the legal heir may receive the benefits.
A Non-earning spouse: If one of the spouses is not on any income, the sum assured for the two cannot be more than the maximum sum assured. A few policies offer premium waiver if the primary insured dies.
Provide fixed monthly payment: In some cases, some policies provide a fixed amount of money when the spouse insured dies.
Life Insurance Coverage Amount
It is not easy to state the coverage amount that will be sufficient for you. But the rule of thumb is that an amount that is 10 times your income could be sufficient. People are different and their needs keep changing.
Also, the situation we find ourselves in is always different. Therefore, you must assess your situations and circumstances. It will help you decide the amount of coverage you will say is enough for you.
The simplest way to calculate the amount is to multiply your after-tax income by the number of years your need will be around. You will then have to add the cost of major events that are likely to happen in the future.
They include things like college fees for your children and purchases. Lastly, you will have to subtract your net assets and use the present value table to calculate the present value of the amount you need. It will help you figure out the amount to invest in the policy.
At this point, you can comfortably calculate the premiums you need to pay today and during the term. But you need to factor in the amount you will pay on expenses. The most important ones are food, shelter, transport, health insurance, and clothing.
If you have done all this, you are ready to get quotes. The price of the policies varies depending on your lifestyle. Also, different companies use their methods to come up with the figure for the coverage.
Look at the options available and ensure that you select the best. Lastly, ensure that you check and understand the tax aspect.
Life insurance is a complicated topic. Very few people understand how it works. As a result, it may be necessary to shed some light on the most asked questions.
Get answers to the commonly asked questions.
Q1. What happens when one of the partners in joint life insurance dies?
If any of the couples in the joint life insurance dies, the surviving spouse receives the full payout. When it happens, the plan ceases to exist. This is true in the case of the first to die policy. But for the second to die policy, the payout will be made upon the death of the remaining spouse.
Q2. How is the traditional joint life insurance different from first to die insurance?
The two policies cover married couples but operate differently. Joint life insurance is also referred to as the second to die. In the case of first to die insurance, the payout is made as soon as one of the spouses dies. The surviving spouse receives the payment. In the traditional joint life, the payout will be made after the death of the remaining spouse. The payments are made to beneficiaries.
Q3. Is it possible for a polygamous man to have joint insurance?
No, it is not possible. In many states, polygamy is illegal. So a person who is in union with more than two other people cannot be covered under a joint life policy.
Q4. What factors do you consider when choosing a joint insurance policy?
Your long term financial goal is important. But, the situation you are in matters. Look at whether your spouse is working and the number of dependents you have. Also, your spouse income is an important factor when going for a joint insurance policy.
Q5. What are the main advantages of a joint insurance policy?
A joint cover will always pay regardless of the partner that dies. Also, it is cheaper compared to where each spouse takes their cover. The policy is quite ideal for a couple trying to save money on premiums. It also covers the other partner who stays at home taking care of children.
Having looked at life insurance for married couples, you are better placed to make a decision. Look at the resources available and choose a plan that will work for you.