Do Both You and Your Spouse Need Life Insurance if You Make the Same Amount of Money? Here's What Suze Orman Says

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  • You might think you don't need life insurance for one spouse when the other is getting coverage and both earn equal amounts.
  • Not buying life insurance for both spouses is a mistake you might regret -- especially when there are kids in the mix.

It's important to buy the right amount of life insurance in any situation, including one where two partners earn equally.

It's often the case that having children is a catalyst for buying life insurance. And that's understandable.

People who are married, for example, but have independent careers might assume that if their partner were to pass away, they'd still have the ability to go out and earn money. But when kids come into the mix, parents tend to get more serious about life insurance. And that's not a bad thing.

Now, if you're the sole breadwinner in your household and your spouse doesn't work, you may be inclined to only purchase life insurance for yourself, since your spouse doesn't have income to replace. (That's not necessarily the right choice, but it's a different topic.) But what if you and your spouse earn the same amount of money? In that scenario, you might assume that only one of you needs life insurance if you don't need both salaries to cover bills.

Here's the logic: Say you and your spouse each earn $80,000 a year, and your family can live on just one of your salaries while you save the other. In that case, if your family were to lose $80,000 of income, you'd have less savings -- but you'd still be able to keep the lights on. And that way, you can spend less on life insurance premiums.

But while that logic could make sense to some degree, financial guru Suze Orman feels differently. And she thinks that in the above scenario, it's important that both spouses buy life insurance, even if they're equal earners.

The wrong assumptions could hurt you

You might think you can get away with only having one spouse get life insurance when both are equal earners. But what happens if you and your spouse are in an accident, and you both pass away? Suddenly, your kids are left with no parents -- and no income for support.

One big mistake people make when buying life insurance is assuming that something bad will only happen to one member of a couple. But unfortunately, you never know when both members will be impacted. And so if you have kids, the last thing you want to do is leave them in a position where there's no money coming in to support them.

Also, let's say you and your spouse are equal earners, and you decide that only you'll purchase life insurance. Well, what if your spouse passes away? At that point, you get to live, but you don't get extra money to help cover your living costs, which could include extra childcare expenses.

That's why being equal earners doesn't really change the equation when it comes to buying life insurance. Regardless of what you and your spouse earn individually, you should still both put life insurance in place. And if you're equal earners, you may want to buy the same amount of coverage.

Don't skimp in order to save

Some people might skimp on life insurance to keep their premium costs down. But if you buy a term life insurance policy, you may find that its price tag is quite manageable.

Whole life insurance is another story. Whole life insurance can be very expensive, so in that scenario, it's easy to see why you'd only want to insure one person. But if you opt for term life insurance instead, you might have an easier time affording coverage, thereby making it a no-brainer to put two separate policies in place.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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