The term life insurance for couples and partners

The term life insurance is the most important insurance to financially secure his family members in their own death. Individual risks, such as the purchase of a property or the existence of the partner and the children, require special protection.

We have compiled the most important information about the optimal contract design of the risk insurance as well as the cancellation and modification options.

What options do couples have with term life insurance?

When taking out term life insurance, couples can decide whether to take out two individual or one joint insurance contract. When making your decision, look for the tax differences that exist with term life insurance. We will show you how you can save as much of your contributions as possible.

Two individual contracts

The policyholder and the insured person are identical in this variant. The partner is entered as the beneficiary for the insurance benefit. Thus, in the event of death, one of the partners receives the sum insured from the other’s contract. The amount of the sum and duration of the contract can be selected at this option in its own discretion. In the event that both partners die, the full sum insured under both contracts will be provided to the surviving dependents. In case of separation or divorce, you may register another person as a beneficiary.

advantages
disadvantage
Maximum flexibility in the contract design with regard to the sum insured and the duration of the contract. Two individual contracts can be slightly more expensive than a partner insurance.
Maximum flexibility when the partnership or marriage is terminated. For unmarried people, inheritance tax usually applies because of the inheritance tax exemption of only € 20,000.
If both insured persons die, the sum insured of the two contracts is paid out to the surviving dependents.  

About Cross Insurance

In particular, for non-marital partnerships, a contract constellation is important in which as far as possible inheritance tax is not incurred. This can be achieved, for example, by cross-insuring one partner and insuring each other’s contracts. This variant can be explained most simply by an example.

Example: Sarah and Martin are not married and would like to take out term life insurance to hedge each other. You decide on two contracts, but do not want to pay inheritance tax in case of benefit. Sarah therefore concludes a contract in which she is the policyholder, beneficiary and contributor. Martin will only become the insured person. Martin signs a contract in which Sarah becomes only the insured person. If Martin dies, the benefit will be payable and the sum insured will be paid to Sarah. Since she receives “her own” insurance benefits as the policyholder, the payment does not result in a succession and this remains tax-free.

advantages
disadvantage
Contracts can be made flexible. Two individual contracts can be slightly more expensive than a partner insurance.
Unmarried couples avoid the inheritance tax allowance of only € 20,000. Changing the “insured person” is more difficult to implement when separated.
If both insured persons die, the sum insured of the two contracts is paid out to the surviving dependents.  

What do I have to do to cross-insure myself?

  1. Determine sum insured and duration.
  2. In the first application, enter “Person 1” as policyholder, beneficiary and contributor and “Person 2” as insured person.
  3. In the second application, enter “Person 2” as policyholder, beneficiary and contributor, “Person 1” becomes insured person.

The associated term life insurance

For affiliated term life insurance, partners only sign a contract in which both are listed as insured and beneficiaries. If one of the partners dies, the benefit is paid to the registered survivor (beneficiary); after that the contract ends automatically. The sum insured is only available once. Often a linked term life insurance is taken out to secure a real estate loan. If the insured person is not also the policyholder in the contract, the estate tax may be charged. Therefore, both partners should be policyholders in the combined life insurance. If a benefit is payable, it is only subject to 50% of inheritance tax.

Important

In order for this rule to apply, the insurance contributions must be paid from a joint account.

The associated term life insurance is often cheaper than individual contracts, but usually not the best choice . If both insured persons die off at the same time – for example in the event of a traffic accident – the sum insured will only be paid once. The protection can therefore not be sufficient for the survivors – for example the children. In addition, a hedge with different sums insured or maturity is not possible.

How is the affiliated life insurance still called?

  • Partner term life insurance
  • Mutual risk insurance
  • Term life insurance in the partner tariff
  • Life insurance Partner Agreement
advantages
disadvantage
Contributions may be slightly lower for partner insurance than for two individual contracts. A different need of the partners regarding insured sum and duration, can not be considered.
  If both insured persons die at the same time, the benefit will only be paid once. The protection of the survivors may therefore be too low.
  Both partners must agree to a termination.
  Inheritance tax liability may exist.

Which term insurance fits my life situation?

The term life insurance is a flexible product due to the free compatibility of insurance sum and term. This enables you to secure different phases of your life situational. CostBend shows you when which type of term life insurance makes sense.

The term life insurance for young families

Young families have a lot of plans and accordingly, their protection should be flexible. The need for protection is higher due to the upcoming education of the children. And from the statutory pension insurance in the event of death is usually not a sufficient widow’s or orphan’s pension to expect to maintain the usual standard of living. For a financed property, the need for hedging continues to increase. A suitable term life insurance therefore includes a post-insurance guarantee, with which the sum insured can be increased without renewed health checks. The contributions to be paid are also based on the age of entry, which is why an early start of the contract makes sense.

These points are particularly important for term life insurance for young families:

  1. Calculate sufficient insurance sum.
  2. Pay attention to a reinsurance guarantee without health issues.
  3. On flexible contract terms, so you can respond to changing living conditions.

The term life insurance for house building

The way to your own property is not always easy. In addition to the right financing future property owners have to take care of many more things. Thoughts for the right protection should not be neglected. The property should remain with the partner or family in the event of death. With a term life insurance, the loan amount can be completely hedged. With a residual debt insurance, which also belongs to term life insurance, an exact hedge of the respective loan amount is possible.

Advantage: In the case of so-called falling or flexible term life insurance, the sum insured falls during the term according to the loan amount. Special repayments can also be considered.

These items should include a term life insurance for house building

  1. A sufficiently high sum insured to cover all structural eventualities.
  2. Optionally, a falling sum insured, so as to save contributions.
  3. Flexible duration and a possibility to reduce the sum insured.

The risk life insurance for families with children

The own home is occupied and the family planning is completed. The children go to school and the home loan is to be paid off in the next few years. In addition to the mutual protection and protection of the children is important. In term life insurance, partners should therefore not only consider each other but also the children as beneficiaries. Even if only one partner works, both should be protected, since in a death, the financial burden of looking after the children and the order of the household can rise sharply. The term life insurance should also include options to increase the sum insured, for example, to be able to react flexibly to further offspring.

These items should include a family life insurance policy:

  1. Post-insurance guarantee for certain events (eg building a house, other children, taking out a loan).
  2. A reasonable sum insured and term, taking into account the possible costs caused by school or study.

The risk life insurance for families / couples without children

Couples without children usually have higher disposable income. If both partners work, there is also a lower need for hedging. Common liabilities can be hedged with adjusted risk insurance. In the case of real estate loans, for example, a falling or flexible term life insurance offers itself; for other loans, a term life insurance with a constant sum makes sense. To secure future changes, it is advisable to agree on a post-insurance guarantee.

These items should include a term life insurance for families / couples without children:

  1. Reasonable sum insured
  2. Nachversicherungsgarantie
  3. Flexible contract period

The term life insurance for communities

Unmarried couples do not receive benefits under the statutory pension insurance if one of the partners dies. With a risk insurance, a mutual protection can be achieved. Most meaningful is a hedge with two separate contracts, which are closed “crosswise”. This avoids the inheritance tax liability and the separate contracts allow you to remain flexible in necessary changes.

These points should include a life insurance for life partnerships:

  1. About Cross-way
  2. Nachversicherungsgarantie
  3. Flexible term