Do Unmarried Couples Need Life Insurance?

Living together unmarried is more common than in the past. Cohabitation has nearly tripled in 20 years, according to the U.S. Census Bureau.

Over yesteryear two decades, the numbers have risen from Six million to 17 million – or 7% from the total U.S. adult population. The main reason may be due to a transfer of attitudes or couples may be moving together to save cash. In either case, a slew of people are cohabitating without the protections of marriage.

It's normal to get distracted by the romance of living together. Once couples cohabitate, it’s all too simple to sidestep probably the most difficult conversations. What happens if you break up – or worse – one individuals suddenly passes away? Not every couples avoid talking about it. In fact, some people tackle these challenges head-on by planning for a worst-case scenario.

We spoke to 2 unmarried couples about their decision to protect their partners with term life.

Protecting from the unexpected

Laura Gariepy, 34, is really a full-time freelance writer who's the breadwinner and earns the majority of her family's income. Her partner, Brad, 37, receives limited disability income through Social Security – and it is his only income source. The Florida couple also lives with Brad’s mother, who's 71 and it is retired.

Gariepy says it would be very tough on her family to pay the bills if she weren't any longer around. “While he is doing have income, it would be extremely difficult for Brad and the mom to pay the household expenses,” she explains. To combat this risk, she made a decision to protect her family with a 20-year, $500,000 term life insurance policy.

Term life insurance is usually pretty affordable, specifically for younger, healthier people. For example of the cost of a $500,000 term life insurance policy at different term lengths for any non-smoker in excellent health:

Gariepy considered several factors before buying a $500,000 life insurance coverage. Her first instinct ended up being to get enough coverage that they may potentially remove the remainder of her mortgage. This would reduce the cost of living for Brad, who would inherit her house. The remaining $300,000 would help Brad and the mother pay bills, possibly for many years. Gariepy says they previously live a fairly frugal lifestyle. “I don’t want him to need to worry about money – at least not for a while,” she notes.

Gariepy believes it is important for unmarried couples to think about life insurance in their overall financial strategy – particularly if an abrupt loss would produce a significant financial burden – as with her family's situation.

Peace of mind for that future

Cait Howerton, 29, chose to protect her partner with term life insurance while she's finishing graduate school. Like a professional financial coach and candidate for CFP(R) Certification, Howerton may be the primary income earner. Her partner, Catrina, 25, is focusing on a doctorate in mathematics along with a doctorate certificate in women’s, gender, and sexuality studies. The pair lives together in Atlanta.

Catrina’s graduate fellowship and teaching assistant job will allow her to graduate debt-free, but an abrupt loss would be devastating – causing profound emotional and financial difficulties. To minimize the possibility hardship on Catrina, the couple selected a 10-year, $100,000 term life insurance policy on Howerton’s life. The shorter policy term reduces the price of payments.

“She'd have to replace my income not less than 3 years if I died unexpectedly,” Howerton says. They considered several factors before deciding on a $100,000 life insurance coverage. For starters, Catrina would inherit Howerton’s savings, retirement account, and apartment. They also added in Howerton’s student loan balance. Their choice to purchase a $100,000 policy is based on their short-term needs – and doesn’t include the price of a future family.

Here are some examples of the price of a $100,000 term life insurance policy at different term lengths for a non-smoker in excellent health:

Cait and Catrina are planning to get married in 2 to 3 years, after which they will revisit their life insurance needs. “For now, this amount and term covers us in an affordable monthly rate,” Howerton says. She says if either partner of the unmarried couple depends on the other for any significant amount of income, they may want to consider how life insurance might help in their particular situation.

Be proactive with cohabitation

Whether you're living together to “test the waters” or curently have a long-term commitment, it certainly is smart to be proactive. By receiving live together, you are accepting a brand new degree of responsibility for one another's wellness. Prior to signing a lease and renting a moving truck, start talking about the future. A cohabitation agreement is one of the best ways to protect each other. You may also want to consider estate planning tools like a will, power attorney, health care proxy, and access to each other's online password managers.

If you're relying on each other financially, for a limited time period, it may be worthwhile to shop around for any term life insurance policy. The payments may be a lot more affordable than you expect – and if the unexpected happens – your partner may have one less aspect to worry about.