More and more people are choosing cohabitation as an alternative to traditional marriage. How do these multiple partnership models impact life insurance?

Marriage is falling out of fashion in America as an increasing number of people choose simply to live together with their partner. U.S. census data reveals the dramatic decrease in marriage rates over time and the slow-but-steady rise of cohabitation.

It’s the result of widespread approval for this arrangement among Americans aged 18 to 50, with only the majority of those aged beyond that group feeling that marriage is still best for society. This shift in the norm begs the question: how does traditional life insurance fit into the modern picture?

The many faces of cohabitation

Essentially, any cohabiting couple may be said to be married under common law if they live in one of the 16 states which recognize this arrangement. The resource website Unmarried Equality provides detailed state-by-state information.

Common law marriages carry the same societal rights and privileges as traditional marriage—so much so, that a divorce must be obtained upon separation even though no marriage certificate exists. New York abolished common law marriage in 1933, but there is a Constitutional loophole here. Our state must recognize a common law marriage that is valid in another state after the couple moved to New York.

So, from a life insurance perspective, can an effectively married couple share the life insurance benefits of the other? In New York, there is no obligation of financial support attached to a couple who cohabits unless they’ve made an agreement to the contrary. For an unmarried couple to qualify, they typically must make that arrangement known and prove that they share an insurable interest—a situation where one would suffer financially should the other pass away.

This is usually a simple matter to prove when two people are cohabiting and sharing the expenses of a home and/or other financial responsibilities, like caring for a child or another dependent. Once insurable interest is verified, one partner may successfully name the other as their life insurance beneficiary.

There are other scenarios insurers will consider such as living together while engaged. This is effectively like marriage and cohabitation. Insurers will usually consider an engaged couple to be married—provided a wedding date has been set—and will treat their life insurance accordingly.

Domestic partners and life insurance

Some states that don’t recognize common law marriage do recognize cohabitation models such as domestic partnerships and civil unions, and New York is one of them. Your partner may not be your spouse, but your life insurance policy might still recognize them as a Qualified Domestic Partner (QDP).

Again, not all states recognize QDPs and there are currently no definitive federal guidelines on the term; but in the eyes of insurers, there are typically only 3 qualifying criteria for domestic partnership:

  • The couple consists of jointly financially responsible individuals aged 18 years or older
  • They are not related by blood
  • They are unmarried but hold an exclusive relationship

Ultimately, the designation depends on the policyholder(s). An individual can generally name anyone with whom they have some form of relationship as their beneficiary. Thus, marital status, gender, and sexual preference needn’t be barriers in ensuring that a loved one is provided for—assuming you put in the time and proper insurance paperwork to name them.

Cohabitation through financial necessity

Finally, there’s also the important consideration that cohabitation may be a necessity for some individuals, rather than a choice. Economic hardships may make the cost of marriage—currently averaging $38,700—prohibitive.

Couples who can’t foot the bill for matrimony may choose cohabitation as a money saver. They may also see other expenses as non-essential and something to be avoided, and life coverage might be on that list. Our previous blog highlighted how 61 percent of Americans say they have “other financial priorities” over life coverage.

We like to remind our readers that having life insurance is one decision that makes sense regardless of your domestic or romantic situation, or even your age. It can also be a lot less expensive than many people may assume. A monthly premium of less than $70 is the national average for coverage of $250,000, so don’t let this valuable coverage pass you by.

Let NICRIS be your insurance partner

Whichever form of domestic situation you prefer, the NICRIS team is here to help you find the right insurance solution. We’ll listen to your current circumstances and your plans for the years ahead, and help you evaluate the most cost-effective coverage for your needs. Get in touch to learn more and address any questions you have about life insurance.

NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice or would like a free, personalized insurance review just drop us a line.