When Most people think about life insurance, they only think about covering the breadwinner, but they’re missing something very important, their spouse!
What is your plan if your stay-at-home spouse passes away? What would happen with you kids’ care? Would you need to reduce your hours at work? Hire live-in help? Have your parent’s stay with you? Would you have to quit work? Most people think of life insurance as income replacement, but not as time and effort replacement. Having a policy on your non-working spouse can save you a lot of unneeded heartache during an already difficult time. This bit of planning can really provide you luxury of not having to immediately go back to work and provide money to care for your children.
How much coverage should my non-working spouse have? For most families with young children, we would suggest a minimum of $250K for a non-working spouse. A more realistic amount is $500k to $1m but having some coverage is better than having none.
While a non-working spouse needs at least that much coverage, a working spouse may need even more due to the loss of income in the event of their death. Generally, the maximum amount the Non-working spouse can get is ½ the benefit amount that working spouse has in force or is applying for.
If they’re working, the amount of coverage they can buy will be limited to a multiple of their income dependent on their age or ½ of the breadwinner’s coverage amount, which ever is greater.
- Example #1: If a 35-y/o woman earning $40K year her husband is making $150K/ year, they both want to apply for a million dollars. Because the maximum income multiplier for a woman her age is 30x income, they could both apply for $1M in this scenario. If she was not working, she could apply for a maximum of $500K
- Example #2: A 55-year-old woman in the exact same scenario with the exact same income. Based on her age the max multiple of income is 10X, so the most coverage she could get would be $400k based on income alone. Since her spouse is applying for $1m she could get $500k. If her husband did not have at least $1m total in force of applied for she’d be limited to $400k
So how much is this going to cost? The answer can be surprisingly low, especially if you’re young and healthy.
- A 35 y/o can get 20-year $500K policy for as little as $18-20/month
- A 45 y/o can get a 20-year $500K policy for as little as $38-46/month
If you have any questions about guarantee-issue whole life policies or any other types of life insurance policies, call us today at 1-888-972-0024. Send us an email by clicking below:
Want to schedule a time to speak with an agent?