Buying Life Insurance With Your Spouse in 2022 – Motley Fool

There are three primary ways to buy life insurance with your spouse or partner.

Group life insurance through your employer

Many employers let you buy supplemental life insurance. So what is supplemental spouse life insurance? It’s also known as voluntary spouse life insurance, and it’s coverage you buy for a spouse or partner. The coverage amount is guaranteed, which means you don’t have to take a medical exam to qualify. There is less flexibility in coverage, and if you leave your employer, you lose the supplemental spouse life insurance.

A spousal rider

Many life insurance companies allow a policyholder to add a spouse to an existing or new policy. A spousal rider offers additional life insurance coverage under the same policy. It is generally less expensive than a separate policy, but the coverage amount is lower. Each life insurance company has different limitations on eligibility and premium rates.

Life insurance companies

To find the best life insurance companies for a spouse or partner, shop around and get multiple quotes. By shopping around, you may find a company that best fits your needs and budget. Some companies may offer better value than an employer or spousal rider.

How much life insurance do spouses need?

The amount of life insurance someone needs depends on how much income or other support the insurance needs to replace to provide for loved ones. Many families only purchase a life insurance policy for the primary breadwinner. However, just because one spouse doesn’t contribute income doesn’t mean he or she shouldn’t also consider a life insurance policy. A spouse who is a homemaker, for example, provides valuable household services that can be costly to replace. Spouse life insurance can help cover the cost of maintaining the household.

One rule of thumb is to multiply annual income by 10 and add it to all debts. If someone has debts of $250,000 and a salary of $50,000 a year, using this rule of thumb means multiplying that salary by 10 to get $500,000, then adding the $250,000 in debts to get a $750,000 policy.

For a more individualized calculation, use the DIME formula. The total amount is a good starting point to determine how much life insurance you need. This involves adding up:

Debt: Total outstanding bills plus the cost of final expensesIncome: The number of years of income to replace (including the loss of labor a non-working spouse performs)Mortgage: The outstanding balance of a home mortgageEducation: The estimated future education costs for children