Life Insurance for Couples – Married or Unmarried

Published: October 11, 2019

Should you or your partner die prematurely or be unable to work due to an illness or injury, it could result in severe financial consequences. The surviving or work-abled spouse might not be able to sustain your lifestyle on their own.

Life insurance for couples can be purchased as two separate policies or combined under one plan, which is generally known as joint life insurance. A couple’s life insurance plan might be an excellent way to protect your financial future. If you choose to name each other as beneficiaries and one of you dies, the remaining spouse will receive the lump sum benefit.

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Should husband and wife both have life insurance?

Generally, if you and your partner work or have children, then it's likely that you would both want the financial safety net life insurance provides. Take the time to put a dollar value on everything you and your partner individually contributes to the household, and you’ll come to see the benefit of a life insurance policy.

The importance of life cover for you and your partner

Should you or your partner pass away, the life insurance benefit can be used to:

  • Cover the mortgage payments.
  • Maintain the property.
  • Pay off outstanding debts.
  • Pay household bills and day-to-day living expenses.
  • Maintain your current lifestyle.
  • Support your spouse and children.
  • Pay for your kids current and future education fees.
  • Cover the burial expenses.

The life insurance you have as a couple should be reviewed annually, to ensure it still provides you with adequate coverage, especially after a significant life event. For example, getting married, starting or growing your family, retiring or getting a divorce.

What is a joint life insurance policy?

A joint life insurance plan offers two partners in a committed relationship, married or unmarried, the opportunity to cover themselves under a single life insurance policy. The biggest advantage of joint insurance is the possible discount you could receive. This type of policy might be suitable for married couples, unmarried couples in a long-term relationship or even business partners.

A single life insurance policy covers one person, who is also the owner of the policy, and pays the lump sum benefit to your named beneficiary. Couples purchasing separate life insurance policies can name each other as beneficiaries.

Pros and cons of joint life insurance

Advantages Disadvantages
Cheaper premiums. You may be able to receive a joint policy discount of 5% to10%, depending on your insurer Premiums are generally based on the older partner. If there's a significant age gap, you might want to consider two separate policies as the younger spouse could get cheaper premiums.
Might be more convenient only managing one policy from a single insurer. You might not be able to choose different cover amounts for each person on the policy.
If you both earn a similar salary, then a joint policy can cover each of your dollar value contributions, and the benefit payout might be sufficient. If your relationship ends, for example in divorce, you can't split the policy. You'll have to decide whether to cancel the policy or transfer ownership.
The claim process might be more straightforward and convenient. If a claim has been approved, the payout is made to the remaining partner if they're named as the beneficiary. If one spouse does not qualify for life insurance, then you generally won't be able to obtain a joint plan and will need to purchase two separate policies.

Who offers joint life insurance cover?

In Australia, various life insurance companies offer you the option of a joint policy, including Zurich, AIA, Asteron, ClearView and OnePath. However, before making a purchase gather a variety of separate and joint life insurance quotes from Australia’s major insurance brands and compare pricing, features and benefits.

Different types of life insurance to consider

Below is a list of life insurance options you and your partner may want to consider:

  • Term life insurance: Pays a lump sum benefit when you pass away or get diagnosed with a terminal illness.
  • Children’s insurance: Provides cover for your children should they suffer any number of traumatic events, for example, blindness, burns, terminal illness and death.
  • TPD cover: You'll receive a once-off benefit when totally and permanently disabled due to a sickness or accident and unable to work in your Own or Any occupation.
  • Trauma cover: Pays a lump sum amount should you be diagnosed with one of the critical illnesses listed in your product disclosure statement (PDS). For example, cancer, stroke and heart attack.
  • Income protection insurance: Receive a monthly benefit when you’re unable to work for longer than your waiting period, because of an illness or injury.

Life insurance for different couple types

Each relationship is different, and you should choose a life cover option that meets your unique requirements. Consider the type of relationship you’re in before purchasing a life insurance policy.

Unmarried couples

Unmarried couples in a de facto relationship might want to choose their life insurance type and cover amount based on their combined income, health, and whether they have children. Depending on your requirements, you may also want to consider TPD, trauma insurance and income protection. A de facto relationship usually means that while you aren’t married to your partner, you are living together as a genuine domestic couple, wherein one of the following should generally be true:

  • You’ve been together for at least 2 years.
  • There is a child as a result of your relationship.
  • The relationship is registered under state or territory law.

Life insurance for young married couples

When it comes to life insurance, the younger you are, the cheaper your premiums are likely to be because of your reduced risk of claiming on health-related diseases.

As a newly married couple, you’re probably excited to start building your life together. This typically includes taking out a mortgage, setting up retirement plans, decorating your home, and possibly planning a family.

If one of you were to die suddenly, life insurance would help your young spouse pay for shared expenses, outstanding debts, funeral fees, and the general cost of living. TPD cover, income protection and trauma insurance could help you maintain your current lifestyle should either of you become seriously ill or injured.

Find life insurance for young married couples

Older married couples – over age 65

Older couples might want to review their life insurance policies to ensure it remains relevant to their stage of life. For instance, as senior Australians, it’s likely that your dependent children have left home and that your mortgage is nearly paid off, which means you might want to reduce your life cover, allowing for more affordable premiums.

Gay couples

Providing financial security to your significant other if you were to die unexpectedly is essential for any couple. In 2008, federal government reforms granted gay couples the same rights as unmarried de facto opposite-sex couples, thereby allowing same-sex couples to get the same life insurance opportunities as unmarried couples, like purchasing a couple’s life insurance policy.

How much partner life insurance do you need?

Generally, young couples with children might need more term life insurance than couples without children or whose children have left the nest. You typically need less insurance as your debt and mortgage reduce and your savings and retirement fund increases.

Take note: The higher your cover amount, the more expensive your premiums are going to be. Ask an insurance broker to help you find the right balance between adequate life insurance and affordable premiums.

How much does couple insurance cost?

Your life insurance premium is generally based on a variety of factors, including whether you want two separate policies or a joint life insurance plan. Other things that affect the cost of your insurance are your level of cover, cover type, age, gender, smoking status, health and the state you live in.

What to consider when purchasing life insurance for couples

Individual income levels

You need to consider the differences between you and your partner's income versus your combined expenses. For instance, if both partners earn a similar income, then the same level of cover might be enough to ensure financial stability should one of you die. However, if you are the breadwinner or earn a much higher salary than your partner, you should generally have a larger sum insured.

Owning property together

When you buy property together, you might have to pay a monthly mortgage for up to 30 years. If one of you were to pass away suddenly, a life insurance benefit could help your partner keep up with these mortgage payments.

Breadwinner or a stay-at-home parent

Both spouses support the family, even though it may be in different ways. One partner may be the breadwinner, while the other partner could work part-time or be a stay at home parent.

Both roles are equally important. Should the homemaker pass away you'll need to pay someone to care for the kids, do grocery shopping, clean the house and do laundry. If the income-generating spouse passes away, you'll need a policy that pays enough money to replace said income for the number of years he or she would have remained working.

Your children

If you have children, you need to consider how years before they'll become financially independent so that your cover amount can enable them to continue life as normal. You might also want to find a policy that allows you to add child cover.

Naming your beneficiaries

While most couples nominate each other as the person to receive the benefit payout, you also need to consider what would happen should you both die at the same time.

Some insurers may allow you to name your partner as the primary beneficiary and another person as your contingency beneficiary.

Bundling policies

When purchasing term life insurance for couples, you might be able to combine TPD and trauma insurance with your life cover, thus potentially saving you money.

However, when bundling life insurance policies, the cover amounts are generally linked. Meaning, if you claim on TPD, for example, your combined cover amount will be reduced by the claim amount paid out.

Frequently asked questions and answers

When do you need to purchase life insurance as a couple?

People generally purchase life insurance for different reasons and at various stages of life, for example:

  • Have a family and want to make sure their loved ones will be financially protected should they pass away.
  • Have outstanding debts and mortgage payments.
  • Insufficient retirement savings, and investments.
  • Want financial support should they be unable to work due to injury or illness.
  • Because of their own and/or family medical history.

Can you get life insurance for your partner?

Yes, generally you can purchase a life insurance policy on your partner. Your spouse will be the insured person, and you'll be the policy owner and responsible for paying the premiums. However, your partner will need to provide consent during the application process when complying with their duty of disclosure.

Is a spouse automatically a beneficiary?

No. The policy owner chooses who gets the lump sum benefit when they pass away. You can have one or multiple beneficiaries. For example, your beneficiary(s) could be your spouse, children, parents, siblings or a business partner.

Is joint life insurance cheaper than single?

Generally, a joint life insurance policy can be more affordable than two separate policies because the insurer might give you a discount up to 10% off your premiums.

What happens to a joint life insurance policy when you get divorced?

If you and your partner take out joint life insurance and get divorced, you generally have three options:

  1. Keep the policy as is and decide who will pay the premiums.
  2. Cancel the policy so that you can each buy separate life cover.
  3. Transfer ownership to either you or your ex. This can be slightly more complicated as you will have to work out what the person who is no longer covered by the policy is owed.

Can I keep a life insurance policy on my ex-spouse?

Yes, if you are the policy owner, you can generally continue a life insurance policy on your ex-partner.

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