Term life insurance for couples: who needs to be insured when buying a house
24/01/2026
10
Minutes
Katrin Straub
Managing Director at nextsure
A shared home is for many couples the biggest financial project of their lives. But what happens to the financing if one income suddenly disappears? Find out how to make your home crisis-proof with the right term life insurance.
The topic in brief and concise terms
Both partners must be protected, as property financing is almost always based on two incomes.
Unmarried couples should definitely opt for cross-insurance to avoid high inheritance taxes on the sum insured.
The sum insured should include, in addition to the remaining loan debt, a buffer for children and living costs.
Why safeguarding both partners is essential
In traditional insurance advice, it used to be common to protect only the main earner. In today’s reality, where both partners usually contribute to household income, this view is outdated. If you buy a house together, your bank’s repayment plan is based on the combined earning power of both people. If one of you dies, the remaining salary is rarely enough to cover the monthly instalments, ancillary costs and day-to-day living expenses on its own.
An often underestimated factor is unpaid work. Even if one partner earns less or primarily looks after the children, their loss has enormous financial consequences. Who will take care of the children or the household if you suddenly have to work full time to service the loan? The cost of external service providers can strain the household budget just as much as a missing salary. Our clear recommendation is therefore: insure both lives.
According to the GDV 2025 report, more and more couples are specifically insuring their property loans, but the sums insured are often set too low. It is not just about repaying the outstanding debt to the bank. Smart cover provides a buffer for the transition period, so the surviving partner does not have to decide under time pressure whether to sell the house. At nextsure, we help you calculate this amount precisely, without paying unnecessarily high premiums.
Cross-guarantee protection: the tax-optimal route
When couples take out term life insurance, they are faced with the choice between different contract models. The so-called joint life insurance sounds appealing at first: one policy for two people, paying out if one of them dies. However, this model has one crucial drawback, especially for unmarried couples: inheritance tax.
With joint life insurance, the payout is legally treated as an inheritance. While spouses enjoy high tax-free allowances of €500,000, for unmarried couples this allowance is only €20,000. If the sum insured exceeds this amount, the tax office will come calling for payment. This can mean that a significant part of the sum that was actually intended for the house ends up going to the state.
The solution is cross-insurance cover. In this arrangement, Partner A takes out a policy on the life of Partner B and is at the same time the premium payer and beneficiary. If Partner B dies, Partner A receives the sum from their own policy. As this is a payout from a policy that they themselves took out, no inheritance tax is due. There is no transfer of assets, but rather an insurance benefit paid to the policyholder themselves.
Policy 1: Policyholder and payer is Partner A, insured person is Partner B.
Policy 2: Policyholder and payer is Partner B, insured person is Partner A.
Advantage: Full sum insured for both sides without tax deduction.
Determine the optimal sum insured and term
How much cover is enough? A blanket answer such as five times gross annual salary falls short when it comes to property finance. Your insured sum should primarily be based on the amount of your loan. Ideally, the sum should cover the full outstanding debt at the start. Many providers, including nextsure’s partners, offer decreasing sums insured. As you repay your loan over the years, the financial risk also decreases. A decreasing sum insured adapts to this course and noticeably reduces your monthly premiums.
However, in addition to the loan amount, you should also factor in other considerations. Do you have children? If so, the sum should also cover education costs and living expenses for a few years. Experts often recommend an additional buffer of €100,000 to €150,000 per child. Any existing liabilities or planned renovations to the house should also be included in the calculation.
The policy term should be chosen to last at least as long as the fixed interest period on your loan, or until the children’s financial obligations towards the children end. If you plan to have the house paid off in 25 years, a term of 25 years makes sense. Look out for flexibility: a modern policy should allow you to adjust the sum insured after major life events such as the birth of a child or a salary increase, without requiring a new health assessment.
Special considerations for self-employed people and freelancers
For self-employed people and freelancers, term life insurance should be assessed even more critically when buying a house. Unlike employees, they are not entitled to a state pension and therefore also have no prospect of a widow’s or orphan’s pension. The loss of income hits the family particularly hard here.
In addition, self-employed people often have to take business loans or ongoing operating costs into account, which may continue in the event of death. If your partner is not able to continue or wind up your business at short notice, additional costs arise. At nextsure, we therefore often recommend that freelancers choose a slightly higher level of cover to help cushion these entrepreneurial risks.
Another point is the medical screening. As self-employed people are often under significant pressure to perform, it is advisable to take out the policy early, while no chronic conditions are present. Modern digital processes now make it possible to answer the health questions online and, in many cases, receive immediate approval. This saves time that you can invest more effectively in your business or in planning your home.
Common mistakes when arranging cover for couples
Despite the best intentions, many couples make mistakes that can become costly in an emergency. One of the most common mistakes is a lack of transparency towards the insurer. Anyone who conceals pre-existing conditions or gives incorrect information about smoking habits risks losing their entire insurance cover. In the event of a claim, insurers check very carefully whether the information provided when the contract was concluded was correct.
Another mistake is ignoring inflation. A sum insured that seems high today may have lost a significant amount of purchasing power in 15 years due to currency depreciation. A dynamisation option, in which the sum and premium increase slightly each year, can counteract this. This keeps the real value of your protection intact throughout the term.
Finally, people often forget to review the beneficiaries in the contract regularly. After a separation or when the family grows, the contract should be adjusted. At nextsure, we place great importance on ensuring that you can view and manage your contracts digitally at any time, so that your protection always matches your current life situation.
FAQ
Why is a linked life insurance policy often worse than two separate contracts?
A joint life insurance policy pays out only once on the first death. If both partners die at the same time (e.g. in an accident), the sum is still paid out only once. It is also tax-inefficient for unmarried couples and inflexible in the event of a separation.
How high should the sum insured be when buying a house?
The sum should cover at least the current outstanding balance of the loan. Ideally, add 10 to 20 per cent as a buffer for incidental costs and funeral costs, as well as additional amounts to provide cover for children.
Does smoking play a major role in the contribution?
Yes, smokers often pay double or triple compared with non-smokers, as their statistical risk of death is classified as significantly higher. Anyone who stops smoking during the term can apply for a reduction in premiums after a certain period (usually 12 months).
Is there term life insurance without a health check?
There are very few term life insurance policies without health questions. However, there are plans with greatly simplified health questions, which are often offered as part of property financing or for certain occasions.
When is the best time to close the deal?
Ideally, you take out the insurance at the same time as the loan agreement. The younger and healthier you are when you take out the policy, the lower the premiums over the entire term.
