Americans are waiting longer to get married. This doesn’t mean that today’s couples love each other less than generations past. Most couples are postponing marriage because they want to be financially secure first. Part of being financially secure is owning life insurance.
It’s very common for married couples to purchase life insurance on one another or name each other as beneficiaries of their policies. When you buy life insurance on someone, you need to have consent and insurable interest. Insurable interest exists when one person financially benefits from another person living. Essentially, they are worth more to you alive than dead. With married couples, it’s obvious that they have insurable interest in one another. They live in the same house, both contribute toward bills, and may be raising children together.
The life insurance industry changes and adapts to keep up with societal norms. According to the U.S. Census Bureau, the number of U.S. adults who are unmarried yet cohabitating has risen 29 percent since 2007. For couples that aren’t married but want to buy life insurance on one another, you may need to check a few more boxes, but it isn’t as difficult as it used to be.
Buying Life Insurance on Your Boyfriend or Girlfriend
Unmarried couples in long-term relationships who want to purchase life insurance on one another will need consent from their partner and will likely need to show proof of insurable interest to the life insurance carrier. Examples of insurable interest can include:
- Both individuals being named on a lease
- Jointly owning a home or business
- Debts naming both individuals (such as a car loan)
- Having children
There are situations in which it may prove difficult or even impossible to buy life insurance on each other. Life insurance companies won’t allow you to buy life insurance on someone you’ve just begun to date. If you and your significant other do not live with each other, it may be more difficult to get insurance approval. If you and your significant other are not financially dependent on each other, it will be difficult to be approved.
There is an easier route to consider if you want financial protection for your significant other. It is an easier approval process to buy a life insurance policy on yourself and name your boyfriend/girlfriend a beneficiary than it is to own life insurance on him or her. (Hint: When filling out your application, use the titles “partner” or “significant other” instead of “boyfriend” or “girlfriend”.)
|Buying Life Insurance on Yourself
|Who is the owner?||You|
|Who is insured?||You|
|Who is the beneficiary?||Your significant other|
|Buying Life Insurance on Your Significant Other
|Who is the owner?||You|
|Who is insured?||Your significant other|
|Who is the beneficiary?||You|
A third option would be to name your estate as the beneficiary of your life insurance policy and then draft a will that states how you wish to divide your assets and you can name your significant other as the beneficiary of the life insurance benefit. However, keep in mind that if your estate is named the beneficiary, access to the death benefit proceeds is delayed because the money must go through probate.
If you name your estate as your beneficiary, you can go back and change it to your significant other once it’s inforce, in other words, “active”. A policyowner can change their beneficiaries at any time. However, wait a few months to change it. If you change it right away, the life insurance company is likely to investigate and make it a process.
Buying Life Insurance on Your Fiancé/Fiancée
Being engaged shows a higher level of commitment and financial dependency than dating – in the eyes of the life insurance company. It’s typically not an issue for engaged couples to buy life insurance on one another. Some life insurance companies will want to know that a wedding date is set, but this isn’t always required.
How to Buy Life Insurance on Your Significant Other
If you’re looking to get life insurance on your significant other or name them as beneficiary of your policy, Quotacy can help. We have helped many married and unmarried couples purchase life insurance. Start the process by running a free and anonymous term life insurance quote.
If you want to buy life insurance on your significant other, be sure to complete the online quote and application using their information. (Remember: You can always contact us directly if you want one-on-one assistance.) After running quotes, when you’re ready to apply you will be brought to a page that looks like the screenshot below.
You can see it asks that you fill out the form with the insured’s information (your significant other.) The life insurance company will need to personally contact the insured (your significant other) to verify application information and, if necessary, to schedule the medical exam.
Remember, you can’t just buy life insurance on anyone. Consent is required. If you believe life insurance is important for your significant other, but he or she doesn’t agree, you can’t just buy it on them anyway without their knowledge. If you’re having trouble getting them to understand the importance of life insurance, check out our blog post How Do I Get My Spouse to Buy Life Insurance? There are some tips that may be helpful. We look forward to helping you and your loved one buy life insurance.
Photo credit to: Nathan McBride