Life insurance for couples: whose income needs covering

Both of you are right, and the plan uses both answers. One of you is pointing to the income the household depends on. The other is pointing to the work the household depends on. Life insurance is about replacing what the people left behind would lose, and both of those are losses.

Start with a different question

Instead of "how much life insurance should we buy," ask each other:

If one of us died next year, what would the other need to keep the household going, and for how long?

Answer that for each of you separately. The two answers often differ, and that's expected.

A worked framework

A common starting method adds up four categories. Do this for each partner.

Category	What to include	Where to find your number
Debts	Mortgage balance, car loans, other loans you'd want cleared	Your latest statements
Income to replace	The years of take-home pay the household would need	Pay stubs, times the number of years
Unpaid work to replace	Childcare, housework, transportation the survivor would pay for	Local quotes for childcare and help
Future goals	College savings, final expenses	Your own targets

Then subtract what already exists:

• Savings and investments you'd be comfortable using
• Existing life insurance, including group coverage through work
• Survivor benefits

What you may already have

Group life through work

Many employers provide some life insurance as a benefit, often expressed as a multiple of salary. Check your benefits portal. Two things to know about group coverage: it usually ends or changes when you leave the job, and the amount may be modest relative to a household's needs. Treat it as a layer, not the whole plan.

Social Security survivor benefits

Per the Social Security Administration, certain family members, including a surviving spouse caring for a young child and eligible children, may receive survivor benefits based on the deceased worker's record. Each of you can see your own estimates by signing in to your my Social Security account at ssa.gov. Note that these benefits are tied to marriage and family relationships defined by SSA rules; unmarried partners generally should not count on them.

Covering the partner without a paycheck

This is where the "insure the bigger earner" rule falls short. If the partner who handles childcare, meals and logistics died, the survivor might need to:

• Pay for daycare or after-school care
• Reduce working hours
• Hire help for the house

Get actual local prices for the care you'd need. Those numbers make the case far better than any rule of thumb, and they turn a vague worry into a concrete figure you can insure.

Term or permanent?

Two broad families of coverage exist:

• Term life covers a set period, such as 10, 20 or 30 years, and pays only if the insured dies during that term. It is generally the less expensive way to buy a large amount of coverage.
• Permanent life (whole, universal and variations) is designed to last for life and often includes a cash value component. Premiums are generally higher for the same death benefit.

Many couples match the term to the need: long enough to see children through school or to pay off the mortgage. If you're considering permanent coverage, ask how fees, cash value and premium flexibility work before you buy. Your state insurance department publishes consumer guides on both types.

Comparing quotes

When you request quotes, keep them comparable:

1. Same coverage amount and term length.
2. Same health classification assumptions, understanding the final price depends on underwriting.
3. Note whether the policy can be converted, renewed or adjusted later.
4. Check the insurer's financial strength ratings from an independent rating agency.

Naming beneficiaries

Once policies are issued, name beneficiaries deliberately. If you have minor children, a life insurance company generally won't pay proceeds directly to a minor, so many couples name each other first and set up a trust or custodial arrangement for children as the contingent beneficiary. An estate attorney in your state can explain the options. Our piece on beneficiary forms covers why those forms matter so much.

Revisit when life changes

A new baby, a new house, a big raise or a career break can each change the answer. Put a review on the agenda of your yearly money date so the coverage keeps pace with the household it protects.