Do both my spouse and I need life insurance?

Okay, so you’ve figured out you need term life insurance (congrats, you’ve come to the right place). But if you have coverage, does your better half need it too?

Often, the answer is yes.

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 legacy (and safety net) that you can provide for your life partner.

In fact, a recent study from LIMRA found that 39% of respondents wish their spouse had more life insurance.*

So, what kinds of couples need individual life insurance policies (or more coverage)? Here are the most common scenarios:

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 in the amounts of one to two times your annual salary. Haven Life research found that almost half of those with employer-provided insurance have only between $100,000 and $249,000 in coverage.** When the average mortgage balance in the U.S. is over $137,000, just paying off that debt might wipe out your work life insurance benefit. Which is why a standard rule of thumb for coverage is to have a policy that is equal to at least five to ten times your yearly income.

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.

For most young, healthy individuals, it’s more cost-effective (and protective) to have an individual policy either in place of or in addition to your work policy. To get an idea of what term life insurance costs: a 20-year, $500,000 Haven Term policy, issued by MassMutual, would run a healthy 30-year-old woman about $18 per month. Quite the bargain for a whole lot of peace of mind.

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 term life insurance policies. More than 50% of respondents in a Haven Life research study said they would experience financial hardship if their spouse passed away.*** Not a situation you want to put a child through if you can avoid it.

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 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 know that. In fact, Salary.com estimates that a stay-at-home spouse with one preschool age child and one child in school provides value equal to $162,581 a year.

Even if a working parent was somehow able to handle the cost and time demands of all the household responsibilities and care of the children, 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 for college.

Nearly 8 in 10 parents with incomes over $75,000 expect their kids to go to college. But only 24% of respondents in a Haven Life study reported having college savings plans set up for their kids.*** Losing the support of a stay-at-home parent could make it even harder for your family to save for your child’s college costs. Life insurance can give them that gift.

Regardless of who is the primary income earner, both parents should have life insurance coverage until the children are adults.

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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.

But it isn’t just about the costs you face together today, either. One in 3 respondents to our Haven Life study didn’t have a death plan. Almost half don’t have a will in place.** Yet even with limited assets, death and probate costs can add up fast.

Median funeral costs in 2017 were $7,360 for a basic burial. And probate costs for a $400,000 estate – often not much more than a family home, car, and some savings – costs $20,000 on average. Just these expenses could force your spouse into selling an asset to cover the bill.

Life insurance can help you avoid a difficult decision and provide a financial cushion. With term lengths of 10, 15, 20 or even 30 years, you can select a policy length that fits the needs of you and your spouse. And, if purchased while you’re both young and in good health, it can be an inexpensive part of your monthly budget. For example, a healthy 35-year-old man can purchase a 30-year, $500,000 policy starting at about $40 per month. Probably far less than your monthly impulse Amazon orders.

Term life insurance as your legacy

Term life insurance isn’t a one-size-fits-all solution for couples. Your financial situation, your lifestyle — they all play a significant role in determining if one or both of you need coverage. However, life insurance is a very valuable solution for helping to ensure you have a financial legacy to leave your loved ones — no matter the current status of your savings accounts.

The best thing you and your partner can do is to sit down and have a conversation about your wishes for the other person if you were no longer around. And what the financial impact of that loss would be.

It’s not the easiest of discussions, but it’s a vital one. Each person in a marriage should feel secure and financially protected no matter what life throws at you. Use the information at your disposal to determine as a unit who needs life insurance and how much coverage is required.

After all, peace of mind is key to any happy marriage.

It’s not just easier life insurance, it’s an easier life.

Learn about the perks that come with being a Haven Term policyholder.

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Chelsea Brennan is the founder of Mama Fish Saves, a personal finance blog that focuses on family finance, investing, and reducing money stress. Chelsea is an ex-hedge fund investor whose work has appeared in a wide array of publications, including Forbes, Business Insider, and more.

*Source: LIMRA 2017 Insurance Barometer Study

**Haven Life Insurance Agency, LLC conducted the Next Generation of Parents study during March 2017. It involved a 29-question, online survey administered to a sample size of N=500 adults ages 18-59 with children ages 0–5 years old.

***Haven Life Insurance Agency, LLC conducted this original research in July 2018 for educational/informational purposes only. It involved a 30-question, online survey administered to a sample size of N=500 adults ages 26 to 54 who are married or living with a partner and have dependent children under the age of 16. Average age was 39 years old.

Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.

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