Life Insurance

Life Insurance for Dual-Income Families

May 22, 2020
Close Up Portrait Of Young Korean Family
For some people, the idea of getting life insurance is a no-brainer. For example, maybe they’re the sole breadwinner in the family and they know that in the event of their passing, their loved ones could take a massive financial hit and be burdened by debt. In that scenario, a life insurance policy may seem like a must. But what about less obvious situations? Like a two-income household with children? If both partners make money, is life insurance a necessity?

Why should dual-income families have life insurance?

To put it simply: life insurance is important for many households, including those where both partners have an income. Your family and household are accustomed to living with both incomes, and losing one could impact your financial stability. Having life insurance as a dual-income family can help to pay for funeral costs and can help to offset the lost source of income as your family adjusts.

Not having enough or any life insurance coverage isn’t just an inconvenience—it can be a devastating blow to loved ones in the event of your passing.And while no one likes to think about the facts surrounding death and the aftermath on families, the statistics speak for themselves, indicating that scores of people are left suffering because of inadequate financial safety nets. For example, 5% of U.S. kids lose a parent before age 15, and 70% of U.S. families go bankrupt within 3 months of losing the breadwinner.

We both have high incomes. Do we still need life insurance?

The question many people in a dual-income household ask is whether both breadwinners really need life insurance policies. While life insurance may seem like an optional add-on, there are good reasons why it’s essential:

  • Your financial stability: Having a life insurance policy in place means you won’t leave behind a shared mortgage, outstanding debts, bills, or any other obligations to your surviving spouse.
  • Your family’s quality of life:In the event of your passing, your spouse may still have an income, but may also have to pick up extra hours at work or sacrifice their wellbeing to maintain the household. On top of the emotional and psychological stress of coping with an unexpected loss, your partner may also be left to deal with costs like childcare and home maintenance, which can add up quickly and result in devastating debt.
  • Your legacy and estate:Do you have sizable assets you want to leave behind? Life insurance is one of the first things that can pay out to your beneficiaries. Speaking with a certified financial planner or estate planning expert, as well as your personal attorney, can empower you to make the most responsible decisions.

Exactly how much life insurance coverage should dual-income families have?

When it comes to deciding on how much life insurance is appropriate, a good rule of thumb for each breadwinner to follow is to choose a plan that covers at least 10 times their annual income. Many will then add on an extra 15-20% of that income to account for the costs they may each leave behind and any remaining costs of shared debts and financial obligations. These can include your mortgage or rent, car payment, bills, utilities, childcare, and/or education.

How to apply for life insurance with Ethos

While there’s no need to panic about your financial planning, it’s worth knowing that the earlier in your life you apply for life insurance, the lower your rate tends to be. However, life insurance is a great idea at any age, so if you haven’t applied yet, there’s no reason why you can’t put the wheels in motion now.

When it comes to deciding on the type of life insurance that’s appropriate for a dual-income household, understanding the options is important. Term life insurance is a great choice for a two-income household because it’s set for a specific period of time. Here at Ethos, we offer terms from 10-30 years and coverage options ranging from $100,000 to $1.5 million. Dual-income households typically choose a term length that can protect their family’s needs for the number of years which they each expect to support their family. Term life insurance is a good option for many dual-income households because it allows you to protect your family until they’ve become self-sufficient, without opting into a policy for life.

Ready to get started on the application process? Visit today and get a personalized quote that will put you one step closer to securing the financial future of your beneficiaries.