Do both my spouse and I need life insurance?

Married couples and domestic partners organize their finances in all kinds of ways, which can make them wonder if and when both partners need life insurance. 

Most figure out they need affordable life insurance. But if you have coverage, does your better half need it too? 

With a marriage or a lifelong partnership comes a myriad of shared financial responsibilities and expenses – as well as dreams you work towards together. Even if one spouse out-earns the other, both bring immense value to the team that would be sorely missed. Not to mention, most people would want to leave their partner in a good – if not better – financial situation, if they could. This is where life insurance comes in. 

When both spouses have life insurance, it offers peace of mind that if one person were no longer around, the other wouldn’t be left in a tight financial spot. Life insurance serves as a safety net that you can provide for your partner. The life insurance beneficiary (or beneficiaries) can use the policy’s death benefit to help meet day-to-day living expenses or plan for the future. 

Situation where: 

• You’re both relying on life insurance through work
• You’re a working couple with children or are planning to have kids soon
• You have children and one spouse stays at home
• You’re a couple without children
• Applying for life insurance

You’re both relying on life insurance through work 

One of the biggest misconceptions about life insurance is that if you have coverage through work, you’re set. The reality is that while life insurance through work is a great perk, it’s usually not enough coverage when you have a mortgage or children or any other shared financial obligations with a partner. Most employer-provided policies are one to two times your annual salary as an employee. Generally, most experts recommend coverage that’s five to 10 times your annual salary. Additionally, a life insurance policy through work usually isn’t portable, which means when you leave your job, your coverage ends. If you have gaps in your employment, choose to become an entrepreneur, or become sick and need to leave work, you could end up without coverage. With life insurance, you want it to go where you go. 

You’re a working couple with children or are planning to have kids soon 

If you and your spouse work and have or are planning to have children, then it’s likely that both of you should buy and maintain individual life insurance policies. Securing life insurance for both parents makes it easier for the surviving spouse to keep life as steady as possible for your children after losing a parent. Life insurance can provide the means to cover household expenses, including a mortgage or rent and childcare, without having to worry about the lost income. If something should happen to one of you, the surviving spouse will need to play both parenting roles. Along with managing a career and earning enough income to continue supporting your family. Having a term life insurance policy provides a financial cushion that can be invaluable during an already difficult time. 

You have children and one spouse stays at home 

Even if one spouse remains at home with the kids while the other earns the primary income, it is essential to maintain two policies. Traditional work isn’t the only type that provides financial value. Any “non-working” parent playing caretaker, nurse, chef, chauffeur and cleaning person knows that. If a working parent were somehow able to handle the cost and time demands of all the household responsibilities and childcare, life insurance can ease the transition and leave a legacy for your children. For instance, depending upon the amount of the insurance benefit, it could provide the financial support for a working parent to take time off to transition kids through their grief and into a new childcare routine. Or, help set them up financially for college. Regardless of who is the primary income earner, both parents should have life insurance coverage until the children are adults. 

You’re a couple without children 

If you and your spouse don’t have children, it’s not always necessary for you to hold individual term life insurance policies. However, there are factors for you to consider before you completely write off the decision as a “no.” Any lifelong relationship comes with shared obligations. Mortgages, student loans, substantial debt, very little savings or any combination of the four, could spell disaster for a surviving spouse. Instead of leaving your better half in a more vulnerable financial situation, life insurance can help cover some of those costs.