Life insurance for unmarried couples: 5 things to consider

Life insurance can help provide the financial protection your loved ones need if you’re not around anymore to support them.

Fortunately, when you buy life insurance, you can name your partner — whether you’re married or not — as a beneficiary. Here are a few things to consider about life insurance for unmarried couples.

1. The importance of life insurance for unmarried couples

Reasons for living together without marrying vary, but one fact remains the same: If you were to die, your surviving partner would miss your emotional and financial support.

The laws and rules for unmarried partners vary from state to state. As an unmarried couple, you likely don’t have the same inheritance rights married couples have. Your partner won’t be automatically entitled to receive monetary benefits unless you legally document them as a beneficiary on your estate plans or wills.

And while a will is the cornerstone of any smart estate plan, it’s possible the amount of money you leave behind in a will won’t be enough to cover the years, potentially even decades, of expenses you’ll leave behind, which is where a life insurance policy comes in.

Ask yourself this: How would it financially impact my partner (and potentially your children) if something happened to me?

If you’re in a long-term relationship but unmarried, you still likely rely on your partner financially (and vice versa). Perhaps you both work, but you earn more than your partner and pay a larger portion of the rent. Maybe you share young children, and your partner earns a paycheck while you care for the kids. Whatever your circumstances, losing one of you would undoubtedly impact your household finances.

When you buy a life insurance policy and name your partner as a beneficiary, you ensure they can make ends meet without you. Benefits from your life insurance policy will pay out to your designated beneficiaries following your death. They’ll have money for day-to-day expenses and long-term needs, such as mortgages or school tuition.

2. Your life insurance needs

Regardless of having a marriage license, you and your partner make a commitment when you decide to live together. You have a responsibility to each other, and that includes preparing for your future needs.

Estimate your financial dependence on each other

To decide on the right amount for your life insurance policy, look closely at each of your financial contributions and how things would change if just one of you had to cover expenses.

If you’re the primary breadwinner of the household, what kind of financial impact will your partner experience if you’re not able to provide anymore? Will your partner need to find work or a higher-paying job to afford their expenses? If so, does this affect child care? These are the kinds of questions and answers you need to determine any financial gaps if one of you dies.

Insurance experts advise that policy coverages should amount to five to ten times your pre-tax annual income. For example, if you currently earn $50,000 annually, you’ll want an individual policy that pays between $250,000 and $500,000. At Haven Life, a 30-year-old woman in excellent health can get a 25-year, $250,000 policy, for $13.74 a month — less than the cost of many streaming services.

Not sure how much life insurance coverage you need? Find out by using a free online life insurance calculator.

The importance of financial planning

Think of a personal financial plan as a road map to your goals. You may have set ideas of what you want, but you need a game plan to achieve those wants.

As an unmarried person in a domestic partnership, you face many legal challenges concerning financial planning. The law will likely not recognize your partner as an automatic beneficiary of your assets, not in the way it does with married couples.

Communicate with your partner about a financial plan — expectations and obligations from both of you. Financial planning means you have some considerations, including but not limited to the following:

• Combing income
• Raising children (if any)
• Planning for retirement
• Handling taxes

You can also enter into a domestic partnership agreement, with the help of an attorney specializing in family law or contracts, to formalize those shared financial obligations.

In some cases, it may make sense to set up a life insurance trust. A life insurance trust owns your life insurance policies, and the trust allows you to designate how you want your beneficiaries to use payouts. For instance, if you have young children, you might stipulate that a certain portion of your life insurance goes toward your child’s college education. Your life insurance trust beneficiary is responsible for carrying out your wishes.

3. Types of life insurance

There are two main types of life insurance: term and permanent life insurance, including whole life insurance.

Term life insurance lasts for a specific period until the term expires or you stop making payments. Typically, you can purchase term life insurance for 5, 10, 15, 20, or 30 years. If you outlive its term, you can apply for a new policy for another set timeframe or potentially renew your policy (albeit at a higher rate).

Term life insurance is generally more affordable than permanent life insurance. Sometimes, you can buy a policy without undergoing a medical exam.

Permanent life insurance lasts your entire life (unless you stop making monthly premium payments). You can also supplement your permanent life insurance with additional term life insurance. In some cases, permanent life insurance will accumulate a tax-deferred cash value from which you can borrow or make withdrawals. Because of its longevity and potential use as an accumulation vehicle, permanent life insurance is usually more expensive than term life insurance.

4. Naming your beneficiary

Once you purchase a life insurance policy that suits your needs, you’ll designate your partner as a beneficiary to receive the benefits.

In some cases, you can designate multiple beneficiaries and assign a percentage of the benefits from the policy to each beneficiary. For instance, if your parents co-signed on your student loans, you might leave them money to cover your remaining balance. Or if you want to leave money to your siblings, a beloved charity, or anyone else who might be impacted by your loss, you can do so.

5. If you have children

For many people, married or not, having children is motivation for getting life insurance. That’s because, well, having a kid is expensive. You might need to move into a bigger house, you’ll spend more on clothing and groceries and travel (not to mention books and entertainment), and there’s long-term concerns like tuition.

If you have a child, life insurance helps provide them with financial protection — regardless of your marital status. That’s because the death benefit, typically a lump sum payout, can be used for all of those expenses listed above. Essentially, a life insurance policy is there to help pay for things if and when you’re not there to do it yourself.

How Haven Life makes life insurance less hard

In ye olden times, you had to deal with a life insurance agent (read: salesperson) to figure out your life insurance needs, and determine whether you were getting the best and most affordable option for you and your loved ones.

Today, you can apply for life insurance online. Start by getting a free life insurance quote, and if you like what you see, you can complete your application over your lunch break. Some people might even qualify for instant approval, without a life insurance medical exam. (Just note that issuance of policy, and payment of the death benefit, depend on your truthfulness during the application process.)

Even if you do require a life insurance medical exam, you can schedule one whenever and wherever is most convenient for you — even at your house. From there, managing your policy online is simple, whether you get coverage for the next 10, 20 or even 30 years.