How to Discuss Life Insurance With Your Partner
Why discussing life insurance with your partner can be difficult
I know what you’re thinking: A conversation about life insurance is either going to be boring or unpleasant or both.
And who wants to spend time thinking about things like death or cancer?
It’s a fair question, discussing life insurance with your partner is one of the fundamentals of good financial planning.
There’s no point working and saving and investing to provide for your each other and your family if one accident can take it all away.
According to this article in FT Adviser, the recent Covid-19 pandemic has led almost six million people to consider life insurance. For some this will be the first time they have thought about it.
Starting the conversation can be the hardest part. Life is full of distractions so actually getting together and having that discussion can be real challenge.
Here are some of the reasons couples might put off this important conversation.
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There's no time to discuss insurance
We’re all busy. When the day is done and you finally get to spend time with your partner you want to relax. Few after-dinner conversations begin with “Tell me darling, what plans have you made in case I die?”
Finding time in our busy lives to sit and discuss questions of life insurance is never easy but getting started can be the most important step.
You don’t need to do it alone. An impartial expert can help explain your options and remind you of the steps you need to take.
One last tip: don’t make this a surprise conversation. Springing this on your partner can be jarring and it could stop them feeling prepared or engaged.
Instead, plan a time to sit down and talk about it, step by step.
Insurance is too expensive
Everything has a cost, and financial pressures only seem to increase, so who wants to spend even more money on something as intangible as a life insurance policy?
We have bills to pay today. Why spend money on something which might never happen?
But what’s really important is the money will you need if someone dies.
How expensive will your life be without their income?
We’ve had more than one conversation with a client who say things like “Oh, if my partner dies, I’ll sell the house and move.”
That sounds easy on paper, but if you have ever bought or sold a house you know how stressful that can be.
Now imaging doing that not because you want to, but because you don’t, and you need to, because you can’t afford to live there anymore.
And now imagine doing all that alone.
The right life insurance can make this unnecessary, ether by paying the monthly mortgage costs or clearing the mortgage entirely.
Then you can sell the house if you want to, but on your terms, and when you’re ready.
No one enjoys talking about death
Facing up to the need for insurance can be difficult, and it can take an emotional toll.
For many of us even the thought of losing someone we love is too much. Some of us have already gone through this experience and don’t want to relieve it.
Insurance is not an exciting subject but that shouldn’t be used an excuse to avoid a conversation.
The emotional reluctance of protection planning can be because we don’t see the need, as much as not wanting to think about the need.
Instead of thinking about the need for insurance as a negative thing, concentrate on the benefits.
You care for your family. Good planning is an expression of this care.
- Going to work every day to pay the mortgage to make sure your family has a home is a responsible, caring act. You don’t want them to be homeless.
- Making sure that good mortgage insurance is in place so that your family don’t lose their home if you die or can’t work is also an act of care.
Having these conversations, however difficult, is an act of care. It shows that you want to keep your loved ones safe even if you’re no longer around to take care of it yourself.
Insurance is fundamentally an emotional subject, but this is one of those times where sticking to the facts and the risks can bring clarity and impartiality to your conversations.
You don't want to discuss a potentially embarrassing medical history
Applying for life insurance means disclosing personal medical details to the insurance company.
These could be facts about ourselves we might prefer to keep secret.
It could be as simple as something like our weight, or an embarrassing medical condition..
The truth is that all of these are reasons you should be looking at life insurance.
If you are already aware that your medical history can raise some questions, then you should make sure the right policy is in place to answer those questions.
You don't understand the risks
This might be one of the biggest reasons couples don’t discuss life insurance, they simply don’t understand the risks involved.
There’s two ways to consider when thinking about risk.
The first is the likelihood of an event occurring.
The second is the impact of that event.
Getting struck by lightning would be extremely unlikely, but very serious.
Dropping your phone is very possible, but far less serious.
The need for some form of financial protection can be both more likely and more serious than we think.
For example, around one in three people will suffer from a serious illness and survive it before the age of 65 – most likely a form of cancer or a heart condition.
What does that mean for your ability to work and pay your bills.
Maybe you have an understanding employer. Maybe you work for yourself. Does this make a difference?
And how will this added financial pressure affect your relationship?
You don't understand the insurance products
We’ve created more detailed pages about the different types of life insurance and protection available here, but here is a brief introduction to the main types of cover available.
In most cases there are several types available, suitable for different risks, such as your family, your income, your mortgage, or your business.
Each plan may also have a range of optional extras, such as inflation protection or a renewable options, among others.
Life insurance
These products pay out their sum assured (the plan value) when you die.
Critical illness cover
Pays out on the diagnosis and survival (that bit’s important) of a defined medical condition, such as cancer or a heart attack.
Income Protection
Pays a portion of your salary if you are unable to work due to accident or illness.
Medical insurance
Covers the cost of private medical treatment and tests.
Types of insurance available
Below is the range of the common insurance and protection products we can help you with.
Our advisers are fully independent so we will only recommend a product (or products) if we are sure they are suitable for your needs.
You worry an insurance claim will be rejected
This is a real concern for many people, and to be fair it is largely once caused by the insurance industry, although this has changed significantly in recent years.
There are two main reasons why a claim might be declined.
One is non-disclosure of material facts.
The other is the claim failing to meet the definitions of the policy.
Non-disclosure of material facts
Your application should be a full and accurate representation of your circumstances, including your health.
Some applicants deliberately misrepresent this information to get accepted, or to get a cheaper premium. It is fair for these polices to be declined because they were obtained under false pretences.
However these could be simple errors, and the changes might not even make a material difference to the application.
Not meeting the definitions of a valid claim
Death is easily diagnosed, but policies like critical illness cover rely on medical definitions that are incomprehensible to most of us. It’s cases like these that have caused a lot of the bad press for the insurance companies.
These days, most life insurance companies provide detailed annual reports on their claims statistics. This information has led to better outcomes as marketing departments need good figures to make their company’s plans more attractive than the competition.
There’s still some element of risk when it comes to medical definitions, but of course if your policy didn’t pay out it doesn’t end. It’s still available in case you do end up making a valid claim later.
Why talking to an independent adviser can help
Having an adviser present can be a real help, especially if they have experience in financial coaching.
Discussing life insurance can be highly emotive for everyone involved because at the heart of it is the sad truth that the person you want to depend on most might not always be there for you.
It means having a serious think about what life would be like without the person you rely on.
It means thinking about life alone.
For some couples this conversation can be a cause of conflict too, as they may come to the discussion with different ideas of risk.
One might not see the need for insurance. Another couple might disagree on the type of insurance. Another might argue over the cost.
Often these discussions will be about the number and nothing more, but money is more than numbers.
Our relationship with money is at least as much emotional as it is logical.
Money is so essential to our lives and can be the cause of so much stress that the obvious need for insurance can be lost in the noise even though the freedom and protection insurance represents should be obvious.
We know talking about money can be difficult
An independent, professional voice during these discussions can steer the conversation in the right direction, raise and answer objections, and be the one to ask the difficult questions.
Some things are hard to talk about – an adviser can be the independent third party to prompt and investigate things that might cause anxiety for couple.
Questions from one partner to the other could cause them to become defensive (“Why didn’t you tell me this?”) or withdrawn or angry due to feelings of failure, or lack of preparation, or ignorance of the financial risk, or letting the partner down with planning ahead.
These questions also force us to consider our own mortality.
We all know that on one level we won’t live forever but having to really face up to what that means for ourselves, and the people we care for, can be very challenging.
It’s true that discussing life insurance with your partner may not be an easy conversation.
It’s also true that the need for life insurance might never arise, but do you want to take that chance? Surely it’s better to have it and not need it, than need it and not have it.
Insurance is about managing risk, but there are no sure things.
But consider the alternative possibility which is one that people face every day.
- If you die, do you want to leave your partner alone and unprepared?
- If you survive, do you want to worry about where the money will come from?
Practical tips to discuss life insurance with your partner
1) Understand your obligations
If you know what your financial commitments are you can prioritise the cover you need.
2) Understand the insurance you already have
3) Now look at the gaps
Gap analysis is simply adding up your liabilities, and adding up your insurance. If your liabilities are greater then have a gap you need to fill.
Don’t forget that if you change jobs your benefits could change too, so don’t get caught short.
That’s why it’s good to have independent policies that are not dependent on your employer.
4) Play ‘what-if’ to understand the risks
- one of you died.
- a child was ill?
- you couldn’t work.
- you lost your income for six months? Twelve months? Two years?
Seriously work through these questions together. You may discover that the answer could be ‘no big deal’, but other times the answer will be a big deal and you will need to take action to fix it.
Speak to an independent firm who will be able to make recommendations from the whole of the market.
They will also be able to thoroughly review your circumstances to make sure you get the cover you need.
5) Don’t let the perfect be the enemy of the good
No financial plan is perfect. We simply can’t afford to do all the things we know we should.
But some insurance is better than no insurance, as long as it helps to meet your needs.
A final word
Don’t think of insurance in negative terms, as planning for the worst.
It’s about identifying risks and making someone else responsible for it.
It’s about protecting and preserving what you love most.
If you want to discuss any of the issues raised here, then give us a call or send us an email. We are a fully independent financial advice firm, and we will only ever recommend a policy to you if we believe it will help your reach or protect your financial goals.
Peter Dixon
I'm the Practice Manager at BBi Financial Planning. If you want to talk about any of the points raised here please get in touch.
