What is spouse life insurance?

No better place to start than the obvious. Spouse life insurance is a type of policy that you can take out on your spouse or domestic partner. Why would you want to do this? One big reason might be that the household breadwinner takes on the monthly costs that their spouse doesn’t have the income to cover. This type of policy ensures that, should a partner die, the surviving spouse (or beneficiaries) can avoid devastating financial burdens.

How is spouse life insurance different from other insurance?

If you take out a life insurance policy on yourself, you’re both the policyholder and the insured. But when it comes to life insurance for spouse reasons, the policyholder IS NOT the insured. You’re taking a life insurance policy out on a spouse or domestic partner. Now, the policyholder can name themselves or someone else as beneficiaries, but they’re the ones making the monthly premium payments.

How do you get spouse life insurance?

You can get a spouse life insurance policy a number of ways. One way is to get it through your employer. You can get something called voluntary spouse life insurance. You could also get a spousal rider (riders kind of being like policy add-ons).

There’s also what’s called joint life insurance, which covers both people in the relationship. You don’t have to be married to get this policy either, but there are pros and cons to joint life insurance vs. individual coverage.

Why should you get spouse life insurance?

You might consider spouse life insurance for a number of reasons. Areas such as income replacement and household services are great starting points for having spouse life insurance. For example, if your spouse is a caregiver to children or aging parents, not having them around could create financial hardship that one source of income might not be able to cover. Now, we wrote about the worth of stay-at-home parents. What are stay at home moms worth? A lot more than most of them are getting, we can tell you that much. Salary.com cites stay-at-home parents as being worth approx. $162,000/year. If you don’t think a single salary can cover that, you may need to think about spouse life insurance a bit more intently.

Who counts as a spouse?

According to Dennis LaVoy, founder of Telos Financial, “You have to have an insurable interest in that person [...].” Insurable interest means you have to prove that you would experience financial hardship should the person you intend to insure dies. Basically, you can’t insure random strangers you don’t know, casual acquaintances, medically-ill public figures, or athletes in high-risk sports. The last two are basically bets, and insurance underwriters don’t really go for that.

Depending on the insurer, spouse life insurance may only be available to married couples or those in a domestic partnership (and domestic partnerships are not recognized in all states, so your options may be more limited). You can take out a life insurance policy on another person, such as a business partner or sibling, but again, you have to prove enough financial stake for the policy to take hold.

Should both spouses be insured?

There are arguments that, yes, both spouses should be insured. Even if one spouse makes more money, both spouses (should) be contributing equally to the household. If one isn’t contributing, that’s a whole other conversation y’all need to be having. Separate supplemental spouse life insurance policies are a common way families protect themselves.

Can I insure my best friend?

It’s always gonna be best friends five-ever, but remember, to insure someone else, you have to prove a financial stake in that other person. You may have the bestest of friends, but you have to prove you would be financially stressed should they die unexpectedly. Now, if you’re part of a platonic life partnership, that might be able to be enough. That’s where two people choose to go through life together, but platonically (i.e., not romantic). So if you and your best friend are choosing to raise your children together in the same house, you could justify having a financial stake in them.

Can you take out a life insurance policy on someone without them knowing?

How very Agatha Christie of you. But no, you can’t take a policy out on someone without them knowing, even your spouse. The person you intend to insure must give their consent to the whole process, including underwriting. Life insurance isn’t like those weird car commercials where someone gifts their partner a surprise car for Christmas. You gotta be on the up-and-up with this.

Conclusion

This may seem like a lot of information, but it all comes down to this: does your partner contribute equally to your household, and would you be in a tight spot, financially, if they were suddenly gone? If you answered yes to either of these questions, then you may be right to investigate spouse life insurance. Term life policies can help supplement or replace lost income, or it can cover the costs of labor that a stay-at-home parent provides. Have a conversation with your partner about what would work best for your family. That’s what a partnership is all about.