What to Look for in a Spouse Life Insurance Policy

When it comes to planning for the future, a few topics are as important as the financial security of your significant other.

When you get married or enter into a life partnership, it’s essential that you make arrangements to protect your partner if you die.

Spouse life insurance is one of the best ways for couples to plan for the future and protect their partner from potential hardship caused by their death.

This RiskQuoter post aims to introduce you to life insurance for partners as an option and help you understand why it is vital to secure your partner financially.

So how do you choose the right life insurance policy to meet your needs?

What is Spouse Life Insurance?

Spouse life insurance protects your family’s future if you pass away.

Once you’re married or in a long-term partnership, you must ensure your partner is taken care of financially if you pass away.

One partner’s life insurance needs may be far greater than the other partner’s if there is a significant income gap.

Life insurance for your spouse may be any policy, including:

  • Term Life Insurance
  • Universal Life Insurance
  • Index Universal Life Insurance
  • Whole Life Insurance
  • Group Life Insurance
  • Supplemental Spouse Life Insurance – An example would be the AICPA life insurance products
  • Voluntary Life Insurance

Another option is to have spousal coverage as a rider on another policy.

However, this option may not provide as many benefits as a stand-alone policy.

Consider the life insurance conversion period available with your policy for term life policies, should you need it later.

Why is Spouse Life Insurance Important?

If you don’t have life insurance, your partner might have to go back to work, change careers, or find a new source of income.

This sudden change could significantly impact their mental health, and your spouse may struggle financially to make ends meet.

It can be tough on couples with children, as many rely on both partners’ income to cover the family’s costs.

How Much Life Insurance Do I Need for my Spouse?

The answer to how much life insurance is needed for a spouse depends on several factors, including:

  • Working Spouse
  • Non-Working Spouse

The most common method for determining life insurance needs is using multiple of your income.

Working Spouse

For working spouses, a multiple of their income is the easiest method to understand.

You take the annual income, multiply it by the years you need the coverage, and that’s your insurance need.

That number may be adjusted up or down for special circumstances.

Life insurance companies also have maximum coverage that they will allow, sometimes up to 30-40x your annual income depending on your age.

Non-Working Spouse

Non-Working Spouse is a term used by insurance companies, not us!

We know that non-working spouses are very busy running households and taking care of other family needs.

The amount of life insurance available for this situation is tied to the amount of life insurance on the spouse working outside the home.

We also have this guide to help you – What You Need to Know About Choosing Your Life Insurance Beneficiary

Many companies address this with their underwriting guidelines.

Some examples include:

  • AIG-American General
    • Age 59 or less – up to $1.5m, depending on household income.
    • Age 60-65 – up to 10x household income
    • Over age 65 – amounts available depend on estate needs
  • Banner Life
    • Generally allows up to the amount of the working spouse
  • Protective Life
    • Generally limited to 50% of the working spouse’s coverage up to $1 million

Remember, those unique circumstances can provide additional coverage; in some cases, we may apply to multiple companies to get the coverage you need.

If you have an ex-spouse, you will find additional details to consider: Life Insurance and Divorce

Final Words

Spouse life insurance is one of the most important things you can do to prepare for the future.

Once you’re married or in a long-term partnership, it’s essential that you get life insurance for your spouse.

You can get a new policy or add a spouse rider with some companies.

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