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Insurance Needs for a Couple with No Kids

Written by Laura Martinez - 24 Comments

My husband and I have recently been reviewing our insurance coverage to figure out exactly we need as a married couple with no kids. We want to have enough coverage to handle personal disasters without draining our finances, but we don’t want to waste money on unnecessary coverage. Our two biggest needs are health insurance and life insurance, so that’s what I’ll be talking about here.

Health insurance

Skimping on health insurance can place you in a financially precarious position. My friend’s father gambled by not carrying a health insurance policy, and he’s still paying for it years later. He thought that he could save some money since he was generally healthy, but that decision wound up costing him much more than he would’ve paid in premiums.

He’s been fortunate enough to to retain ownership of both his business and home through this ordeal, but others aren’t so lucky… Did you know that medical bills are the #1 cause of bankruptcy?

Finding affordable health insurance

If you’re currently working, you may already have health insurance through your employer. If not, check with Human Resources to see if you qualify for coverage. In some cases, you have to work for a minimum amount of time (e.g., 90 days) before you’re eligible. Employer coverage is great because the premiums are often lower than what you can get on your own.

If you’re currently temping, you may be able to get health insurance through the temp agency. For example, when we first moved to North Carolina, my husband used the temp agency’s health insurance and I used my job’s insurance to keep us both covered with minimal out-of-pocket expense.

If you don’t qualify or your job doesn’t offer health insurance, you’ll have to look for private health insurance. You can get a good sense for the prevailing prices by looking at sites like Insure.com or HealthQuote 360.

If you can’t afford comprehensive coverage, you should consider looking into catastrophic coverage (sometimes referred to as “major medical” coverage). These policies have lower premiums, but only cover catastrophic illnesses or injuries.

I searched online for a catastrophic insurance policy and found a few in the $65-$80/month range. As with everything, carefully compare health insurance policies before signing up.

See also:
» How to Save Money on Health Insurance

Life insurance

The main purpose of life insurance is to fulfill your financial obligations after you die. Beyond deciding if you whole or term life insurance, you also have to decide how much life insurance you need.

Finding affordable life insurance

My husband currently has a small life insurance policy through his job, but we’ve been looking at increasing our coverage. We ultimately decided that a low-cost term life insurance policy is the best for our needs.

Since everyone’s needs are different, you should give careful thought to how much insurance you need. While there are some handy rules of thumb out there for “sizing” your life insurance policies, nothing beats running the numbers yourself. Here are some key questions to consider when determining your life insurance needs:

  • How much money will you need for your funeral?
  • How much support will your dependents need?
  • How long will they need this level of support?
  • Do you have any one-time obligations, such as a mortgage payoff?

Buying a term life insurance policy when young and healthy typically results in low premiums. Being in generally good health and avoiding risky behaviors such as smoking also helps keep your rates down.

Once again, online insurance comparison sites such as Insure.com or CompuQuotes or even here at FiveCentNickel can be a great way to get a handle on the prevailing rates. In our case, we found that a $100k, 30 year term life insurance policy would cost around $251 a year. Of course, this will vary based on age and health.

See also:
» How Much Life Insurance do you Need?
» How to Save Money on Life Insurance
» How to Save Money on Auto Insurance
» How to Save Money on Homeowners Insurance

Your thoughts

What sort of coverage do you have? Group health insurance? Or do you have a private policy? What about life insurance? What sort and how much?

Published on July 7th, 2009
Modified on April 22nd, 2010 - 24 Comments
Filed under: Insurance

About the author: helps families achieve financial freedom by sharing tips for reducing debt and building freelance income over at Couple Money.

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» Buying Term Life Insurance, Part IV
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24 Responses to “Insurance Needs for a Couple with No Kids”

  1. 1
    Jacob E Says:

    Maybe you could comment on life insurance for a spouse that is not working? My wife (26) is working 1 more year and then will be a SAHM hopefully. Insurance wouldn’t be replacing any income, but being a SAHM is a full time job that would be an additional child care expense if they were to be gone. What’s enough, or within the ballpark for insurance needs in that general situation?

  2. 2
    Rick B Says:

    My wife and I have 20 year term life through American Family. $250k for me, $32/mo – $100k for her, $18/mo. I’m 24 and she’s 25.

    We also save on our car and homeowners by having all our insurance through one company. We save a ton by bundling our life, home and auto insurances together.

    If you’re not provided short term or long term disability by your employer you may want to look into those as well. This way your spouse can still survive if you’re a vegetable.

    Our health insurance is top notch because she works as a schoolteacher. Premiums are covered by the employer. $50 deductible, no copay.

  3. 3
    sekishin Says:

    We are in a similar “boat” – no kids. My life insurance from my job (3X my salary) would cover our mortgage and about a year of my income. Health insurance is covered for both of us from her workplace policy. Her policy is 1X her salary which would cover about 1/2 of our mortgage. We have no other debts – so am comfortable with our insurance/health coverage. In addition we have retirement savings of 3X my salary saved – for a catastrophic emergency – say we both loose our jobs at the same time.

  4. 4
    dan Says:

    I will be looking into term life insurance policies shortly as well. 24, getting married in a little over a month. I have heard that it is when people enter their 50’s that life insurance rates really spike, so should I go for a 20 year policy and then get another longer term one in my mid 40’s, or go for the 30 year now to save a bit on those extra 10 years and then see what rates are like in my mid 50’s?

  5. 5
    Brokefamily.com Says:

    We both started Term Life Insurance when our son was born. We both have a $300k policy. How we can up with that amount was we added up our house, our debt and enough money for the surviving spouse to take a year off with no worries. If something was to both happen to us our son would be taken care of until after college. Make sure you have your will together I would hate for our family to fight over our little assets currently and upset our son even more. Good article!

  6. 6
    Rick B Says:

    Our insurance agent gave us a sheet of on how our monthly payments will change as we get older and renew the policies, if our health stays the same. Your agent should be able to do the same. There is a set formula they follow.

    Our 50s and up rates seem quite high, but you have to think that in the future the value of the dollar will be less than it is today because of inflation.

  7. 7
    Kevin@OutOfYourRut Says:

    With health insurance, generally you’re better off being in a company sponsored group plan not only because of the employer subsidy, but also because they pay for more procedures than private insurance, and enrollment is automatic.

    If you have to go the individual route, go for a higher deductible, but begin saving up an amount roughly equal to the deductible that way you’re ready just in case. Health Savings Accounts (HSAs) are a good way to do this adding tax deductibility to the mix.

    Another thing to consider is passing up the prescription plan. If you aren’t on recurring maintenance medications, you’ll probably pay far more in prescription plan premiums than you’ll ever get back, especially if there’s a prescription deductible. Prescription plans usually have maximum benefits of a couple of thousand dollars anyway, so it’s not as if you’ll be passing up a priceless benefit. Besides, a lot of chains are offering $4 prescriptions on common meds, which is less than the copay on most plans.

    If you might entertain the idea of doing without health coverage, keep in mind that you’ll be charged full price by providers. Health insurance plans require that a provider discount the cost of services, even for charges paid within your deductible. That discount can be substantial, and it’s worth having insurance for this reason alone.

  8. 8
    MikeS Says:

    My health insurance is with my employer. We have a $1,000 deductible and an 80/20 split generally on expenses. My wfe and I are relatively healthy, hence the higher deductible.

    For life insurance, my wife (SAHM) has $650K, part term and part permanent. For myself, I’ve got $1.75 million. Most of that is term, $1.5M for 20 years at $54 a month. It probably slightly more than she would need to replace my income if something were to happen, but I’d rather be safe than sorry.

  9. 9
    Rosa Says:

    We’ve managed to always get on an employer-sponsored plan for health insurance. It’s been valuable, even when it’s not cheaper than other options, because they have some leverage with the insurance company – my boyfriend’s company has an ombudsman who will pursue unpaid claims for employees, which is really nice.

    For life insurance – my folks bought me a $100K life insurance policy when I was a little kid that meant we didn’t have to buy extra when I was a SAHM or now when I’m working for no benefits. My partner has 2x his annual salary in life insurance from work, enough to pay off the house and stuff our son’s college fund.

    What’s always been more important to me is long term care and disability/dismemberment insurance – which reminds me, I don’t think I have any right now. I can support us if my partner died, but I couldn’t do it and cover good nursing care or be a fulltime caregiver.

  10. 10
    nancy Says:

    I feel embarrassed to ask, but what is a SAHM? Thanks!

  11. 11
    Laura Says:

    @Jacob E: That’s a good question. I would pay

    Great tips everyone! Thanks for sharing your thoughts. We’re actually looking into disability insurance, I’ll write about it soon.

  12. 12
    Gene at www.kitchentablenomics.com Says:

    Hey, Laura – After walking about 300 couples and families through Money Makeovers at the Kansas City Star, let me chime in with two more ideas.

    FIrst, a couple of thoughts about disability insurance if you haven’t come to them already. Your employer may offer it cheaply, but it’s worth looking into buying your own if he doesn’t. It’s at least as important as life insurance because if you are sick and can’t work, bills will still come in even if income doesn’t. Look for something that covers your ability to work your own occupation (Social Security provides what’s known as ‘any occupation’ coverage; that excludes stereotype blind pencil sellers) and covers as close to 70 percent of your income as you can afford. (70 percent is the max many carriers insure.) You will owe income taxes on any benefits you get from a policy your employer buys, but not on anything you buy personally.

    The second kind of coverage to consider, but probably not until much later when you are about 60, is long term care insurance. Even if you have kids later who are able and willing to help, both in-home care and nursing home care may eat the heart out of your savings in a blink.

  13. 13
    MikeS Says:

    @Nancy

    SAHM = Stay at home mom

  14. 14
    KC Says:

    When I was working and my husband and I were both dependent upon each others salary we had about $500k coverage for him and $150k for me. The policies were term and very cheap. The thought process was that if something happened to either of us the coverage amount would pay off the house for the survivor making their burden easier. The reason my husband was covered more so than me was because he was a medical resident and his income potential was far greater than mine – if something happened to him I could pay off the house AND have extra invested for my future.

    Now we have more house, more mortgage and I no longer work. We are still planning on having kids. So we have 2 million on my husband (still term and still cheap cause he’s so healthy) and we have $250k on me. The thought process is that if we do have a child and something happens to me then there will be need for a maid and full-time nanny. Although my husband’s salary could cover these things its nice to know we have coverage in case something does happen and he has to cut back hours to spend more time with his children.

    I think its very important for SAHM to have coverage. We have a term life policy through my college alumni and its about $10/month. Very cheap for piece of mind.

  15. 15
    RB Says:

    My wife and I opted to supplement our employer’s life insurance plans with variable life policies. These give us whole life insurance as well as a tax sheltered investment accounts which we are using as part of our retirement savings. Early on, the premiums here are relatively expensive, but in the long run, the tax free earnings on the investment account more than make up for it. This option is definitely not for everyone, but I think if retirement is way off in the future (we are both in our mid 20’s) it can be a great tool.

  16. 16
    Tony Says:

    Rick B (second poster),

    You may be getting a discount on your auto insurance but not homeowner’s or life insurance. It is illegal to give discounts on those insurances.

  17. 17
    MikeS Says:

    Tony, insurance laws vary by state. What might be illegal in one state might be completely ok in another.

    Discounts will also vary by insurer, some might offer a multi-policy discount in states where its allowed.

  18. 18
    Rick B Says:

    Tony,

    You’re correct in thinking that you can’t get a discount on life insurance by bundling. But by having life insurance with a company, at least in my state, I get a break on the autos and homeowners. It’s called the Auto-Life and Home-Life discounts.

  19. 19
    Funny about Money Says:

    Some years ago, I heard it said that the cost of hiring someone to do the work of a SAHM would be about $30,000/year. That would not cover her presence 24/7, nor would it cover her presence in your bed.

    Women’s work is one of our culture’s most undervalued activities. Add up what it would cost to hire people to provide competent care for your kids; drop them off and pick them up at school; oversee their homework competently (!); schlep them to before- and after-school activities; entertain your colleagues and family; navigate the relationships among all your relatives and your children’s relatives; represent you in the community; entertain your colleagues; entertain you every which way from Sunday; appear acceptably in public with you; train your children to appear acceptably in public; run your kids to the ER whenever they’re sick or hurt; schlep your pets to the vet; nurse your kids, dogs, cats, gerbils, birds, fish and reptiles through various ailments; instill your children with moral and spiritual values; do the family bookkeeping; plan and cook meals; buy groceries and household goods and the family’s clothing on budget; do the laundry; haul the dry cleaning to & from the cleaners; clean the house; take care of the yard; oversee housecleaners, yard men, and repairmen; take care of the kids, pets, house and yard while you’re out of town; travel with you to those high-profile corporate events; take the kids to the zoo; wrangle the kids on vacation trips….. Argh! You can’t afford it!!!!!

    And if she has a job on top of all this? Consider what it would entail for you to try to pay the mortgage, allll by yourself.

    The stay-at-home spouse needs to be insured for at least as much as the worker bee. And if both spouses work, each needs to carry enough insurance to pay off the mortgage and cover child and home care.

  20. 20
    Laura Says:

    I just want say thanks for explaining how you guys handle the life insurance planning situation with a stay at home mom (or dad).

    We also checked with our alumni association and they have a discount rate on life insurance. Thanks for the tip!

  21. 21
    Jesse Says:

    The market for health insurance is dismal and depressing. You’ll find some plans marked as “catastrophic” plans, but the high deductibles and coinsurance rates mean that *every* plan is actually a catastrophic plan: unless you’re very unlucky, you can still expect to pay most unforeseen medical expenses out of your own pocket, because the insurance will only kick in once something *really* expensive happens. They’ll cover the cost of an office visit, but if the doctor’s advice is anything other than “get some rest” or “take this generic drug”, you’ll be paying hundreds if not thousands more to follow it.

  22. 22
    Kevin@OutOfYourRut Says:

    Jesse–Technically, there is no such thing as “catastrophic”, that’s a coloquial term for health ins with a high deductible. Low deductibles can be prohibitive, but if you’re deductible is really high, say $10,000, that’s pretty close to having no insurance, since the only procedures that ever rise to the level of coverage will be the big ones. For the average person, those only happen once or twice in a lifetime.

    But one advantage to having high deductibles is that even if you have to pay for most costs yourself, the providers will still discount the services consistent with the health plan you’re in, even if the insurance company doesn’t pay a dollar on the claim. You’re better off with “catastrophic” coverage than no coverage at all, even if it doesn’t pay for most things.

    It’s also worth having the coverage for the big stuff because big in healthcare tends to be REALLY big, like in the 100s of thousands of dollars. Unless you’re wealthy, and can self-insure, nearly any coverage is better than none at all.

    It’s a crappy system, but it’s all we have!

  23. 23
    Jesse Says:

    If you have $100,000 in medical bills, with 20% coinsurance, you’re on the hook for $20,000 (or maybe only $10,000 if your plan has a cap on out-of-pocket expenses). That’s still “REALLY big” in my book.

    The discount on services is a nice benefit, but does it really balance out the premiums? If you’re spending $200 a month to save $100 on your visits, you have to go to the doctor twice a month to break even. If you get a plan with a $10k deductible and only pay $50 a month, you still have to go to the doctor six times a year to break even. I am not yet convinced that American health insurance is a good value for anyone who isn’t extremely sick or extremely unlucky.

  24. 24
    lawrence Says:

    what about a couple over 60 we don’t need health ins. only life ins.both retired. we both have health issues,

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