Term life insurance for couples: Who needs protection when buying a house
24 Jan 2026
10
Minutes
Katrin Straub
CEO at nextsure
A shared home is the largest financial project of their lives for many couples. But what happens to the financing if suddenly one income falls away? Discover how to make your home crisis-proof with the right term life insurance.
The topic in brief and concise terms
Both partners must be secured, as real estate financing is almost always based on two incomes.
Unmarried couples should definitely choose cross-insurance to avoid high inheritance taxes on the insurance sum.
The insurance sum should not only cover the outstanding loan balance but also include a buffer for children and living expenses.
Why the protection of both partners is indispensable
In traditional insurance advice, it was common practice to only insure the primary earner. In today's reality, where both partners typically contribute to the household income, this viewpoint is outdated. When you jointly purchase a house, your bank's repayment plan is based on the combined purchasing power of both individuals. If one of you is no longer able to contribute, the remaining salary is rarely sufficient to cover monthly installments, additional costs, and living expenses independently.
An often underestimated factor is unpaid work. Even if one partner earns less or primarily takes care of child-rearing, their absence can have enormous financial consequences. Who takes over childcare or household duties if you suddenly have to work full-time to service the loan? The costs of external service providers can strain the household budget just as much as a missing salary. Therefore, the clear recommendation is: Secure the lives of both partners.
According to the GDV report 2025, more and more couples are specifically insuring their mortgage loans, but the insurance sums are often set too low. It's not just about repaying the outstanding balance to the bank. A smart insurance policy provides a buffer for the transition period, so the surviving partner doesn't have to decide under pressure about selling the house. At nextsure, we support you in calculating this sum precisely without paying unnecessarily high premiums.
The cross-collateralization: The tax royal road
When couples take out a term life insurance policy, they face the choice between different contract models. The so-called joint life insurance initially sounds appealing: one contract for two people that pays out if one of them dies. However, this model has a significant drawback, especially for unmarried couples: inheritance tax.
With joint life insurance, the payout is considered inheritance from a legal standpoint. While married partners enjoy high allowances of 500,000 euros, this allowance for unmarried couples is merely 20,000 euros. If the insurance sum exceeds this amount, the tax office demands a substantial amount. This can lead to a considerable portion of the sum, originally intended for the house, flowing to the state.
The solution is cross-insurance. Here, Partner A takes out an insurance policy on the life of Partner B and is simultaneously the premium payer as well as the beneficiary. If Partner B dies, Partner A receives the sum from his own contract. Since it is a payout from a contract one personally took out, no inheritance tax is incurred. There is no transfer of assets; rather, it is an insurance benefit to the policyholder himself.
Contract 1: Policyholder and payer is Partner A, insured person is Partner B.
Contract 2: Policyholder and payer is Partner B, insured person is Partner A.
Advantage: Full insurance sum without tax deduction for both sides.
Determine the optimal insurance sum and term
How much coverage is enough? A general answer, such as five times the gross annual salary, falls short for property financing. Your insurance sum should primarily be based on the amount of your loan. Ideally, the sum should initially cover the entire remaining debt. Many providers, including nextsure partners, offer decreasing insurance sums. As you repay your loan over the years, the financial risk also decreases. A decreasing insurance sum adapts to this trend, significantly reducing your monthly contributions.
Besides the loan amount, you should consider other factors. Do you have children? Then the sum should also cover education costs and living expenses for several years. Experts often recommend an additional buffer of 100,000 to 150,000 euros per child. Existing liabilities or planned home renovations should also be factored into the calculation.
The term of the insurance should be chosen to last at least as long as the fixed interest period of your loan or until your financial obligations toward your children end. If you plan to have the house paid off in 25 years, a term of 25 years is sensible. Pay attention to flexibility: A modern contract should allow you to adjust the sum during important life events such as the birth of a child or a salary increase, without a further health assessment.
Special Features for Self-Employed and Freelancers
For self-employed individuals and freelancers, term life insurance is even more critically assessed when purchasing a house. Unlike employees, they have no entitlement to a statutory pension insurance and therefore no prospect of a widow's or orphan's pension. The loss of income hits the family here with full force.
Additionally, self-employed individuals often have to consider business loans or ongoing operating costs, which could continue in case of death. If your partner is unable to temporarily run or close your business, additional costs arise. At nextsure, we often recommend freelancers to opt for a slightly higher sum insured to mitigate these business risks.
Another point is the health check. Since self-employed individuals are often under high pressure to perform, it is advisable to take out insurance early, while there are no chronic illnesses. Modern digital processes now allow health questions to be answered online and, in many cases, receive immediate approval. This saves time, which you can better invest in your business or planning your house.
Common Mistakes in Securing Couples
Despite the best intentions, many couples make mistakes that can become costly in serious situations. One of the most common mistakes is the lack of transparency with the insurer. Failing to disclose pre-existing conditions or inaccurately reporting smoking habits can jeopardise the entire insurance cover. Insurers thoroughly check whether the information provided at contract signing was accurate when assessing a claim.
Another mistake is ignoring inflation. An insurance sum that seems substantial today could significantly lose purchasing power over 15 years due to inflation. An indexation option, where the sum and premium increase slightly each year, can counteract this. This way, the real value of your cover is maintained throughout its duration.
Finally, people often forget to regularly review the beneficiaries in the contract. After a separation or with the addition of family members, the contract should be adjusted. At nextsure, we emphasise that you can view and manage your contracts digitally at any time, ensuring your cover always matches your current life situation.
FAQ
Why is a joint life insurance policy often worse than two individual policies?
A joint life insurance policy pays out only once upon the first death. If both partners die simultaneously (e.g., in an accident), the sum is still only paid out once. Additionally, it is disadvantageous for unmarried individuals in terms of taxes and inflexible in the event of a separation.
What should the exact insurance amount be when buying a house?
The total should at least cover the current remaining debt of the loan. Ideally, you should add 10 to 20 percent as a buffer for incidental expenses and funeral costs, as well as additional amounts to secure the children.
Does smoking play a significant role in the contribution?
Yes, smokers often pay double or triple compared to non-smokers, as their statistical risk of death is significantly higher. Those who quit smoking during the policy term can apply for a premium reduction after a certain period of time (usually 12 months).
Is there a term life insurance without a health check?
There are very few full-term life insurance policies without health questions. However, there are tariffs with greatly simplified health questions that are often offered in the context of property financing or on specific occasions.
When is the best time to close the deal?
Ideally, you should take out the insurance at the same time as the loan agreement. The younger and healthier you are at the time of conclusion, the cheaper the premiums are over the entire term.
