Do unmarried couples need life insurance?

Living together unmarried is more common than ever before. Cohabitation has nearly tripled in 20 years, according to the U.S. Census Bureau.

Over the past two decades, the numbers have risen from 6 million to 17 million — or 7% of the total U.S. adult population. The reason may be due to a shift in attitudes or couples may be moving together to save money. Either way, a slew of people are cohabitating without the protections of marriage.

It’s normal to get distracted by the romance of living together. Once couples cohabitate, it’s all too easy to sidestep some of the most difficult conversations. What happens if you break up — or worse — one of you suddenly passes away? Not all couples avoid talking about it. In fact, some folks tackle these challenges head-on by planning for a worst-case scenario.

We spoke to two unmarried couples about their decision to protect their partners with term life insurance.

Protecting against the unexpected

Laura Gariepy, 34, is a full-time freelance writer who is the breadwinner and earns the majority of her family’s income. Her partner, Brad, 37, receives limited disability income through Social Security — and it’s his only source of income. The Florida couple also lives with Brad’s mother, who is 71 and is retired.

Gariepy says it would be very tough for her family to pay the bills if she were no longer around. “While he does have income, it would be extremely difficult for Brad and his mom to pay the household expenses,” she explains. To combat this risk, she chose to protect her family with a 20-year, $500,000 term life insurance policy.

Term life insurance is generally pretty affordable, especially for younger, healthier people. Here are some examples of the cost of a $500,000 term life insurance policy at different term lengths for a non-smoker in excellent health:

Gariepy considered a few factors before deciding on a $500,000 life insurance policy. Her first instinct was to get enough coverage that she could potentially pay off the rest of her mortgage. This would cut back on the cost of living for Brad, who would inherit her house. The remaining $300,000 would help Brad and his mother pay living expenses, possibly for many years. Gariepy says they already live a fairly frugal lifestyle. “I don’t want him to have to worry about money — at least not for a while,” she notes.

Gariepy believes it’s important for unmarried couples to consider life insurance as part of their overall financial strategy — especially if a sudden loss would create a significant financial burden — like in her family’s situation.

Peace of mind for the future

Cait Howerton, 29, decided to protect her partner with term life insurance while she is finishing graduate school. As a professional financial coach and candidate for CFP® Certification, Howerton is the primary income earner. Her partner, Catrina, 25, is working on a doctorate in mathematics and a doctorate certificate in women’s, gender, and sexuality studies. The couple lives together in Atlanta.

Catrina’s graduate fellowship and teaching assistant job will allow her to graduate debt-free, but a sudden loss would be devastating — causing profound emotional and financial difficulties. To minimize the potential hardship on Catrina, the couple decided on a 10-year, $100,000 term life insurance policy on Howerton’s life. The shorter policy term cuts back on the cost of monthly premiums.

“She would need to replace my income for at least three years if I died unexpectedly,” Howerton says. They considered several factors before deciding on a $100,000 life insurance policy. For starters, Catrina would inherit Howerton’s savings, retirement account, and rental property. They also added in Howerton’s student loan balance. Their choice to buy a $100,000 policy is based on their short-term needs — and doesn’t include the cost of a future family.

Here are some examples of the cost of a $100,000 term life insurance policy at different term lengths for a non-smoker in excellent health:

Cait and Catrina are planning to get married in 2 to 3 years, at which point they will revisit their life insurance needs. “For now, this amount and term will cover us at an affordable monthly rate,” Howerton says. She says if either partner of an unmarried couple relies on the other for a significant amount of income, they may want to consider how life insurance can help in their particular situation.

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Be proactive with cohabitation

Whether you are living together to “test the waters” or already have a long-term commitment, it’s always a good idea to be proactive. By agreeing to live together, you are accepting a new level of responsibility for one another’s well being. Before signing a lease and renting a moving truck, start talking about the future. A cohabitation agreement is one of the best ways to protect each other. You may also want to consider estate planning tools like a will, power of attorney, health care proxy, and access to each other’s password managers.

If you are relying on each other financially, even for a limited period of time, it may be worthwhile to shop around for a term life insurance policy. The monthly premiums may be a lot more affordable than you expect — and if the unexpected happens — your partner may have one less thing to worry about.

Kate Dore is a freelance personal finance writer and candidate for CFP® Certification.

Opinions are those of the author or individuals interviewed.

The information provided is not written or intended as specific tax or legal advice. Haven Life Insurance Agency does not provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.