Let’s be honest, life insurance isn’t a trending topic of discussion. In fact, only sixty percent of adults have some sort of coverage. Considering the mortality rate is 100%, that is a sobering statistic.
Life insurance can provide long term care for your loved ones should you pass before them. If you need coverage for your spouse, and you have a policy or are getting a policy, the Spouse Term Rider can potentially save you both money.
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What is the Spouse Term Rider?
The Spouse Insurance rider is an extra feature or add-on that allows you to take out coverage for your spouse as part of your existing policy instead of having your spouse take out an individual life policy. Your spouse will have to pass a medical exam just as an individual policy.
You can add your spouse to your policy typically with a lower death benefit or face amount and a term limit, with much less hassle and less cost compared to your spouse taking out an individual policy with that company or another company.
Life Insurance companies offer different types of coverage from term policies to whole life insurance policies. Most companies will also offer life insurance quotes with riders.
Life insurance riders are basically additions to your policy, sort of like toppings on your ice cream. You can pick and choose which riders you want, however, each addition will drive up your monthly premiums.
Here Are Some of The Most Prominent Riders:
- Waiver of Premium Benefit
- Accidental Death Benefit
- Child Rider
- Term Conversion Rider
- Return of Premium Rider
- Accelerated Death Benefit
Who is Eligible?
Anyone who works with a life insurance company that provides the Spouse Insurance Rider for their given policy is eligible to take out coverage as the primary insured so long as they meet the policy requirements and minimum face value requirements. These are going to change from one company to the next.
If you work with Nationwide insurance agents, for example, you can add the spouse Rider to your insurance policy and it provides level term insurance for your spouse, but it doesn’t provide them with permanent coverage even if you already have a permanent life insurance policy.
There are certain points during the life of the policy where you can convert the term life insurance policy into a permanent life insurance policy as known as whole life policy or a universal life policy, but companies like Nationwide have certain insurability limits.
In fact, if you take out this life insurance rider on your spouse, the policy benefit ends once your spouse reaches a certain age or if your policy expires.
Who is the Spouse Term Rider Best for?
This benefit rider is something that you should absolutely consider if you have a spouse who might have a high-risk class, have a terminal illness, or might be older in age. These things can impact the cost of a premium policy if your spouse tries to take out an individual policy.
If you need additional coverage for your spouse that might also be something to consider, especially if existing cash values are insufficient. One thing to consider is that if the primary policyholder passes away, the spouse loses coverage and that death benefit is no longer effective.
So, the remaining spouse would have to find new coverage which will likely cost more than if they had purchased an individual policy early on. Similarly, if the marriage ends with divorce the benefit no longer covers the spouse and they will have to find coverage on their own.
Spouse Term Rider Pros
1. Less Expensive
The benefits you receive with a spouse term life insurance policy is the cost savings.
In most cases, if you don’t need a separate policy with the same coverage amount as you have, you might only need $50,000 in death benefits for the other spouse because they are not the sole income provider or they don’t have any extra debts or anything in between.
Life insurance companies typically charge a flat rate based on the health category and age per unit of coverage. A unit of coverage is typically $1,000. It is less expensive for you to take on the additional cost of adding your spouse to your policy by taking advantage of the Spouse Insurance Rider rather than taking out individual policies because of this charge per unit of coverage.
2. Affordable Coverage in One Place for You and Your Spouse
The different life insurance rates from various life insurance companies for adding your spouse to your existing policy are going to cost less than if you were to both take out individual policies for comparatively the same amount of death benefit.
Spouse Term Rider Cons
1. Not Every Company and Policy Offers the Spouse Insurance Rider
The drawbacks are that not every company offers this benefit.
Some companies require you to set up the benefit before you start your policy so if you already have a policy you might have to cancel it or wait for it to expire in order to take advantage of this benefit.
2. Maximum Spouse Life Insurance Coverage of $100,000 (Usually)
Moreover, many of the companies that do provide this rider do so with strings such as a minimum face value of $100,000 or an expiration date based on age.
How Much Does the Spouse Insurance Rider Cost?
Adding the Spousal Rider is still possible but not nearly as common today as it once was. For example, United of Omaha offers this feature but they do require a minimum coverage of $100,000 for the spouse in question. Lincoln benefit life is similar to United of Omaha but they require $50,000 for spousal Coverage.
Nationwide requires a minimum amount of $125,000 in face value for the original policyholder and a minimum $25,000 for the spouse being covered under the rider. In terms of cost, it is going to vary based on which company you choose and how much the coverage is.
If you are in your fifties for example and you want to add this to an existing policy through Lincoln benefit life, the cheapest option might be $140 per month for you to cover your spouse with a $50,000 death benefit.
If, for example, a husband already had an individual policy and now his wife wanted a policy, the cost of a 15-year, $100,000 Term Policy for the male might be $50 per month and to take out $10,000 worth of final expense coverage for the spouse might cost $57 per month which brings the total to $107 per month.
Comparatively, if that same male simply added his wife with the spousal Rider it could save $34 per month for the same amount of coverage.
Now, these figures are going to vary based on:
- Coverage Amounts
….and other features of the applicants but generally speaking it will cost less to use the spouse insurance rider than it will take out a second individual life insurance policy.