Many couples think they won’t need life insurance until they marry and start a family. But this is not always the case: in many cases, people who live together without being married also need insurance that gives financial stability to that couple if one of the two parties dies.
If you are part of an unmarried couple, you should consider the need for life insurance. Almost without realizing it, the obligations and things in common grow, and there comes a time when you realize that, with or without a wedding, you already need an instrument that protects that union if something happens to you or your partner. One of the quick ways to get it is a policy that allows you to ensure both members, but that is not always easy if there is no legal marriage.
Single couples: why do they need insurance?
In the United States, it is increasingly common for couples to live together without being married. Statistics say that three out of four American women have lived with an unmarried partner before their 30th birthday. The data also indicates that single couples are already more frequent than marriages as ‘first union’, that is: people are going to live together for the first time before getting married.
With this proliferation of single couples, new phenomena are produced for which society must propose solutions. From medical coverage or children’s education, through life insurance, everything must adapt to this new model of the family not sanctioned by a wedding.
In the case of life insurance, many people have traditionally postponed the decision to purchase until marriage. But as the marriage drags on, it is necessary to change that way of thinking and plan how to protect the couple against tragic eventualities. Therefore, life insurance for unmarried couples becomes a necessary tool.
With a life policy, a couple can protect assets they have in common, such as a house that still has a mortgage on it. You can also provide yourself with a safety net that gives confidence to the couple during pregnancy. Or to ensure the welfare of children in common. Also to generate and protect future savings, or to deal with partially contracted debts.
Many reasons can lead a single couple to take out life insurance that covers both members, but, in general, it is enough that there are financial or economic interests in common for life insurance to become useful and even necessary. It is what in the terminology of the insurance sector is called an insurable interest, that is, that the death of one of the members of the couple seriously damages the other. This interest is taken for granted in married couples, but sometimes it needs to be tested in unmarried couples.
And you also have to keep in mind that if the couple is young, there are all advantages: insurance is much cheaper for young people. Whether they are still in their twenties or well into their thirties, they will pay less for their policies. This is because young people generally have better health and longer life expectancy, so insurers take lower risks and can offer lower prices.
How to set up insurance on a single couple
As we have seen, the problem for single couples is getting insurance companies to allow them to buy insurance that includes a person with whom they have just started living and with whom there is no legal relationship. That is why it is necessary to prove that insurable interest so that the company can equate the couple to conventional marriage. It may also be the case that one of the couples wants to buy insurance for the other. In principle, you can’t just do it: you will need the consent of the person to be insured and, again, prove the insurable interest.
To demonstrate that interest, unmarried couples should live together and, to the extent possible, prove that one party is financially dependent on the other. In addition, they must configure the life insurance in such a way that the coverage is crossed. This can be done in two ways:
- Beneficiary, the other. In the simplest version, each member of the couple purchases insurance and is listed as insured. As a beneficiary of the compensation, he designates the other part of the couple. It is the traditional format of life insurance.
- Owner, the other. In a slightly more complex version, each member buys and pays for health insurance from the named insured to the other. This, as insured, designates the other party as the beneficiary. With this configuration, it is guaranteed that the insurance remains in force even if the couple breaks up because whoever has contracted the policy and pays the premiums is and continues to be the beneficiary after the dissolution of the couple.
You may also consider interesting a third way to protect your partner with insurance: name your inheritance as the beneficiary of the life insurance. Then, you must arrange in a will how that money will be distributed after your death. Of course, keep in mind that this procedure has consequences: it can make your heirs take a long time to access the money because first, they have to overcome the complicated legal procedures of inheritances in the United States
What is the best insurance for a single couple?
One of the best solutions for couples is joint universal life insurance. It is one of the lesser-known options of universal insurance, which in turn is a variant of permanent insurance.
With joint universal insurance, the insured person can include their partner in the policy for very little more money. Thus, whoever dies, the other party receives compensation.
Joint universal insurance usually works under two modalities: payment after the first death and payment after the second death. In the first case, when one of the members of the couple dies, the other receives compensation. In the case of payment after the second death, the benefit is released when the last member of the couple dies, and in this case, the beneficiaries are other people (children, or whoever has arranged).
These types of policies have many advantages. The first one, the price: it is always better than paying for two insurances. In addition, since two people are insured, the risks are diluted. That makes the qualifying process easier. You also have to count on the fact that they have tax benefits for the couple.
This double coverage can also be achieved through clauses that allow you to modify life insurance that you already have, generally permanent insurance. It is a fast track, but again it requires proving that insurable interest and express consent.
Another affordable and practical option for unmarried couples, who are often young and have little income, is term or term life insurance. With term insurance, a policy is contracted that has a specific validity: 5, 10, 15, 20, or 25 years, for example. With this coverage, a few years that can be complicated are protected: the childhood of the children, a time of economic difficulties… Later, if the couple settles down and the income improves, term insurance has a great advantage: it can be transformed into permanent insurance without re-qualification.
As you can see, obtaining life insurance for single couples has its difficulties. So-called registered domestic partners, common-law partners, or those already engaged in marriage, encounter fewer complications. However, those who simply live together without being registered have to make a little more effort. And those who have the most difficulties are dating couples who do not live together.
If you live as a couple without being legally married, you should explore the options to obtain life insurance. You will see that one fits your needs and those of your way of life.