Life Insurance For Your Wife

Written on November 4, 2016 by Bill

Should you buy life insurance for your wife? The answer to this question is absolutely yes but here’s how many men think about the subject:

Not too long ago, I was speaking on the phone to a guy who told me he wanted to buy life insurance and protect his family in case he died. After about a half hour of going over his financial situation and narrowing down the amount of insurance he should buy, I dropped a bomb of a question on him…

“How much insurance coverage should we buy for your wife?”

Total silence.

Then I asked, “Doesn’t it make sense for your wife to have life insurance too? Just in case something happens to her?”

After several seconds of more silence, he finally said, “Nah. I’ll keep working and still be able to take care of my kids.”

Macho, Nonsense.

Most Women Are Under Insured

Many years ago when the workplace was primarily dominated by men, most people thought the woman’s place was in the home.  But today, things have changed. The Department of Labor research shows that women now represent almost 50% of the workforce. So women are on equal footing when it comes to their roles as wage earners.

Despite these statistics, less than 40% of women own life insurance, compared to almost 67% of men who own a policy. Of those 40% of women who do own a policy, they don’t have nearly as much coverage as their male counterparts. Women have an average of $130,000 of coverage compared to $187,000 for men.

To some folks this might seem like a lot of money but when you consider the national average cost of running a household is about $35,000 – $40,000 per year, $130,000 runs out in less than 4 years.

Why You Should Buy Life Insurance For Your Wife

How would you answer these questions if your spouse suddenly died?

  1. Could you pay the mortgage, real estate taxes on your income alone?
  2. Who will help take care of your children? Can you afford childcare?
  3. Could you pay your household expenses on just your income?
  4. Do you have enough money to cover medical or hospital bills if your spouse has a prolonged illness?
  5. Could you pay for final expenses? Funeral costs?
  6. Will your children be able to go to college on just your income alone?

Buying a life insurance policy for your spouse should not be overlooked whether your wife is working or if she is a stay at home mom. If your wife is working, a policy not only replaces her income but also provides liquidity or cash to cover household bills and maintain a normal lifestyle for your family.

Many men wrongly believe that life insurance is only for a spouse that is working and provides an income. But this couldn’t be further from the truth. Even a stay-at-home mom has a dollar value attached to her role in taking care of the home and children.

This creates a financial responsibility for a stay at home mom or homemaker to help pay the rent or mortgage payments, real estate taxes, childcare, groceries, utilities, transportation and much, much more.

Finding the Right Insurance Policy for Your Wife

When it comes life insurance, there are different types of policies you can choose from. The type of policy you choose depends on what fits your budget, your needs and your goals.
For instance, the needs of a young mother raising 2 children are much different than if she is older and her children are in college. To some, they think once the kids are out of the house, there is no longer a need for life insurance coverage. This if a grave misconception. See why in this article: Life Insurance For Parents

Term Life Insurance for Your Wife

Term life is the least expensive way to provide coverage for your wife. Term insurance is temporary coverage and the premium or cost is level throughout the term. Policy types available are 10,15,20,25 and 30-year term insurance.

However, once the term is over, the coverage ends. So you need to plan accordingly and factor in how long she might need the coverage. If the coverage is needed for a longer period than 30 years, then permanent insurance would be the most appropriate choice

Whole Life and Universal Life (Permanent Insurance)

Permanent insurance is available many different forms: Whole life insurance, Universal Life (UL), Guaranteed Universal Life (GUL) and Equity Index Universal Life (IEUL).
Each type of policy works under the same concept of lifetime coverage but The primary concept behind all these different types of permanent policies is to provide lifetime coverage. As long as your premiums are paid, your coverage will not end no matter how long you live. It is perfect for people who see their insurance needs as long term.

Whole life insurance is designed to provide permanent or lifetime coverage. As long as your premiums are paid, your coverage will not end no matter how long you live. Whole life has a death benefit, which pays your beneficiaries if you die and an investment account called cash value.

This type of policy is 6 to 10 times more expensive than term insurance because the excess premium goes to a cash value account which earns interest and grows over time. The cash value account can be accessed by the policy owner for any purpose or at any time. Some people find whole life valuable because they are building equity in their policy whereas with term insurance, you are renting your coverage and there is no equity in the policy.

Universal Life (UL): This type of policy is a combination of term insurance and whole life. Universal life provides coverage that will last your lifetime and a cash value account that earns interest. The major difference is that Universal life allows for flexible premiums whereas with whole life your premiums are fixed.

Indexed universal Life (IUL): This policy is a universal life policy with a death benefit and a cash value account that is invested in the stock market. The account is managed by an investment company and any gains are credited to your account. Your savings account is guaranteed to never lose value but the amount you can earn is limited to certain thresholds agreed to within the contract.

What If I Can’t Get Coverage for My Wife (Uninsurable)

3 Ways to buy life insurance for an uninsurable wife

If your wife has been declined for insurance due to serious health issues or if the policy is just too expensive to afford, there are some other options available. However, be prepared for the likelihood that she will only be able to get a small amount of coverage. But even a small policy can provide funds to cover final expenses or pay some outstanding debts.

Here are three ways to buy life insurance on your wife who is uninsurable:

1. Add her to your group life program at your employer
Some employers offer their employees group life insurance through their benefits program. If you are lucky enough to have this coverage, you can add your wife to the program without a medical exam.
Normally, spousal coverage is limited to 50% of the amount of coverage you are offered at work but at least it gives her some coverage. Some is better than none.

2. Buy a no medical exam life insurance policy
A no exam policy is exactly what it sounds like – there is no medical exam and your wife could qualify for this type of policy. However, even though there is no medical exam, there still are a few medical questions that need to be answered. Depending on the nature of your wife’s health issues, a policy could be approved. Just be prepared for a small amount of coverage.

3. Add a spousal rider to your policy.
Some life insurance companies offer a “spousal rider” feature which if you have this on your policy, you could add your wife. You would need to check your policy or call the insurance company to find out if this feature is available and how much coverage would be offered.

Be aware that usually there are a few medical questions that need to be answered so certain conditions may make her ineligible. There is also an additional cost that will be charged to your policy for the rider but if all else fails for spousal coverage, this might be an easy alternative.

About Behr Insurance
About Behr Insurance

Bill Behr has been helping people make smart decisions regarding life insurance planning for more than 20 years. While most insurance advisors attempt to be everything to everyone, Bill focuses on the life insurance needs of families and business owners. Contact me directly at: 914-633-1717 to learn how you can save money.

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