Talking to Your Spouse About Death...and Life Insurance

Talking about death and life insurance can be scary - nobody likes to think about dying. It is an especially stressful conversation to have with your spouse. In some cases, people who are so worried about what will happen when they die that they buy too much life insurance. There are also people who are willing to look death in the face and make the appropriate arrangements, but there is so much misleading and incorrect information about buying life insurance floating around that they don’t get the right policy.

Many people find this topic so uncomfortable that they never buy life insurance or talk to their spouse about what would happen should they pass on. Discussing life insurance with your spouse doesn’t make you the proverbial villainous other half who is waiting for the other to die to cash in on the life insurance policy. It’s just a smart conversation to have when you share your life with someone.

Hopefully, you have a good marriage where your spouse would be distressed if you died rather than pleased. In any case, here are a few tips and pieces of information that can help you talk to your spouse about death and life insurance in a rational and informed way.

Leave your emotions at the door.

If you stay calm and matter of fact while having a discussion about death with your spouse, it will help your spouse stay calm as well. There’s no need to get graphic or gory, or to suggest possible ways you might die. And although it sounds rather cold to discuss death in terms of primary and secondary earners, tell your spouse not to take it personally. Also make sure to explain that if for some reason you drop coverage on a family member, it is an economic decision, not a decision reflecting your love for that person.

Understand what life insurance is designed to do.

In terms of economics, your financial goal in life is to have the highest standard of living possible. This is also your goal in death – you want to purchase a plan that will allow your family to continue living at this standard. If you die young, the risk is that your family will not be able to maintain this standard due to losing an earner. Forget the Past.

This is About the Future

Realize that you may have made unwise insurance decisions in the past and rectify those mistakes. Now is the time to reassess your logic through an economic lens – you may have to start thinking counter intuitively. For instance, young people who are just beginning their families tend to buy a small amount of life insurance. They then add onto that insurance when their income rises and they can afford it. Although this seems quite reasonable, the correct economic action is actually counterintuitive. Young families should have as much coverage as possible, since if the primary earner dies young the family loses out on decades of future earnings. A person nearing retirement on the other hand, can reduce the amount of coverage since they don't have as many years of future earnings waiting for them.

Sometimes less is more.

Oftentimes the wrong family members are insured or over insured. Secondary earners in the family either shouldn’t be insured or should only have a small amount of life insurance. Although the death of a secondary earner will affect the overall income, also take into account the fact that the primary earner will no longer need to support that person indefinitely.