What are the key benefits of couples life insurance?
If you are in a relationship with someone and both have financial obligations that would be left behind if one were to pass away, it could be worth considering protective cover to ensure the partner does not endure financial hardship. Some of the key benefits of a joint couple policy include:
- Lump sum payment. The lump sum benefit from a life or trauma insurance policy can go a long way to ensure that the person you care for (and in some cases, the children you leave behind) are cared for and are able to maintain their current way of life
- Joint policy discounts. Joint policies can attract premium discounts as great as 5% for couples.
You can compare joint policies with an adviser by filling out the form below. Continue reading for more information on joint policies.
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Life insurance for married couples
Getting married is often a key stage for many Australians to consider taking out life cover. It is a time that often brings new financial obligations and for many a time where they do not have as much disposable income as they will in later stages. Some key financial obligations that can arise at this stage include;
- Car Loan, Credit Card Debt and Personal Loans: Small personal loans can combine to create a significant expense to be covered.
- Mortgage: Many couples will look to buy their first home after having tied the knot. A new home and mortgage is for many the biggest financial commitment they will make in their lives. Having the right level of cover in place to ensure that one's spouse is not left with this hefty debt is essential.
- Dependent Children: The arrival of your first children is an exciting time for any parent. With this arrival also comes a realisation of how they would cope if one of the parents were to pass away or become seriously ill. Consider some of the expenses that would need to be covered;
- School Fees
- Medical Bills
Should unmarried couples consider life insurance?
Whether life insurance is worth considering for unmarried couples really comes down to their own situation and if they have any current or future shared obligations. Some of these obligations could include:
- Short term debts e.g. credit card
- Other loans e.g. car loans
If there is shared financial obligation i.e. they may not be married but already have a child or have accumulated mortgage debt, then it is still worth taking out a joint plan.
What's the benefit of taking out cover at a younger age for couples
It is worth noting that it is still worth young couples considering life cover even if they do not have the same financial obligations that they expect to have later in life. Taking out cover at a younger age, can save applicants thousands as they will most likely be in better health than in later in their life and will be looked on more favourably by an insurance underwriter. Most policies will feature “Guaranteed Insurability Feature” which allows policyholders to apply for more cover into the future without having to undertake further medical underwriting. This means that you do not have to predict how your situation may change in years ahead but still take advantage of competitive premium rates.
What happens to joint life insurance for divorced couples
Unfortunately not every relationship withstands the test of time and many people are often left wondering what would become of their joint policy in the event of divorce or separation.
There are a number of options available for people in this situation;
- One spouse can take on the policy and repay a percentage of the sum-insured to their previous partner. The policy will be passed on to the one policy owner and they will be entitled to all of the policy benefits. It is best practice to ensure that a contact is devised to ensure this is withheld.
- The joint policy can be cancelled and two new policies can be applied for by the separate parties.
- If the couple remain on good terms after the separation, the policy could remain in place with an agreement for premium payments to be shared. This could be complicated as new financial obligations arise.
Key considerations for couples looking to take out life insurance
1. Who is the main breadwinner?
It is important to consider the difference in income stream from both partners. There should be a greater sum insured in place for the person contributing the greater amount to the combined household income.
2. Domestic and workplace duties of both partners
Even if one partner does not work, their role in the family and duties performed can still equate to a significant dollar value. To put it another way, consider the hours that may be spent carrying out household duties and how much would need to be paid to have these duties covered by a professional housekeeper.
Whether it be mowing the lawn, feeding the kids, taking the kids to school or cleaning the house, every task undertaken by a parent can have a dollar value associated to it. Consider how your finances may be affected if the surviving parent was left with all of these responsibilities on top of earning an income.
3. Bundled Policies with TPD and Trauma Cover
The reality is that while many families may not have to endure the hardship of loosing a loved one, many families may still endure the hardship that is brought from serious injury or illness. A 2011 underinsurance Infographic by humblesavers.com showed that in the space of 12 months, over 235,000 working age people with dependent children, suffered a serious injury or illness. In addition, statistics have shown that 1 in 3 women and 1 in 4 men will suffer some form of cancer in their lifetime. What these statistics show is an important to consider other forms of living insurance to provide adequate support to families forced to stop work and deal with these illnesses.
Trauma Cover for Couples
Trauma cover can provide excellent support for couples where one has suffered a specified medical trauma such as stroke, cancer or heart attack. The lump sum benefit paid can ensure that medical expenses can be covered and the family may continue its way of life if the insured is forced to take time off work.
TPD Cover for Couples
TPD provides a lump sum benefit if the policyholder becomes disabled and is unable to work again. This benefit could ensure that the family is still able to maintain their way of life and the spouse could continue to earn an income while the proper care is provided for the disabled partner.