Dependent life insurance helps fill the gaps for funeral expenses and lost income when a family member who does not earn much income dies.

When people think of “life insurance,” they generally think of a policy that pays out upon the death of a family’s primary earner.

But losses (like funeral expenses) are also incurred when someone else in the family dies, even if that person didn’t earn much or any income. Dependent life insurance can help fill these gaps.

Dependent Life Insurance

Dependent life insurance covers your spouse, domestic partner and children.

You are automatically designated as the beneficiary of these supplemental policies.

Purchasing Dependent Life Insurance

If you already have an individual life insurance policy, your insurance company may offer an endorsement to cover your dependents. Coverage may be purchased just for your spouse, just for your children, or both.

Premiums for your spouse will be higher than those charged for your children. Some insurers ask for evidence of insurability, which typically requires you to complete a form about the general health of your family so they can evaluate any medical risk.

Premiums for spouses depend on the face value of the policy and your spouse’s age. Premiums for your children usually cover all your children for one rate.

Taxes on Dependent Life Insurance

Dependent life insurance benefits are generally not considered taxable income if you pay the full premium. If your employer pays any portion of the premium, dependent life benefits may be considered a taxable benefit.

How much dependent life insurance do you need?

Determining how much dependent life insurance you need depends on how you answer the following questions. First, determine whether you rely on your spouse or domestic partner financially:

Then consider your financial situation:

You may also want to calculate:

Finally, you may want to determine the funds needed to:

Remember to consider inflation and your changing coverage needs over time. For example, while some costs may increase due to inflation, you may not have to adjust your coverage needs because your house is almost paid off. Your personal and family circumstances will inform these considerations.

For More Information

If you have questions about how dependent life insurance can benefit you and your family, talk to your broker or benefits advisor. They can answer your questions, help you decide whether this coverage is right for you and determine how much coverage you need.