diff --git a/.README/rules/require-compound-type-alias.md b/.README/rules/require-compound-type-alias.md
index 59cac7f4..1ac67c9c 100644
--- a/.README/rules/require-compound-type-alias.md
+++ b/.README/rules/require-compound-type-alias.md
@@ -1,14 +1,32 @@
 ### `require-compound-type-alias`
 
-Requires to make a type alias for all [union](https://flow.org/en/docs/types/unions/) and [intersection](https://flow.org/en/docs/types/intersections/) types. If these are used in "raw" forms it might be tempting to just copy&paste them around the code. However, this brings sort of a source code pollution and unnecessary changes on several parts when these compound types need to be changed.
+Requires to make a type alias for all [union](https://flow.org/en/docs/types/unions/) and [intersection](https://flow.org/en/docs/types/intersections/) types. If these are used in "raw" forms it might be tempting to just copy & paste them around the code. However, this brings sort of a source code pollution and unnecessary changes on several parts when these compound types need to be changed.
 
 #### Options
 
-The rule has a string option:
+The rule has two options:
 
+1. a string option
+
+* `"always"` (default)
 * `"never"`
-* `"always"`
 
-The default value is `"always"`.
+2. an object
+
+```js
+{
+  "rules": {
+    "flowtype/require-compound-type-alias": [
+      2,
+      "always",
+      {
+        "allowNull": true
+      }
+    ]
+  }
+}
+```
+
+* `allowNull` – allows compound types where one of the members is a `null`, e.g. `string | null`.
 
 <!-- assertions requireCompoundTypeAlias -->
diff --git a/.README/rules/type-id-match.md b/.README/rules/type-id-match.md
index 6fe93027..f5f6036c 100644
--- a/.README/rules/type-id-match.md
+++ b/.README/rules/type-id-match.md
@@ -4,7 +4,7 @@ Enforces a consistent naming pattern for type aliases.
 
 #### Options
 
-This rule needs a text RegExp to operate with Its signature is as follows:
+This rule requires a text RegExp:
 
 ```js
 {
diff --git a/package.json b/package.json
index 06bcef5a..983c94ea 100644
--- a/package.json
+++ b/package.json
@@ -22,7 +22,7 @@
     "chai": "^4.2.0",
     "eclint": "^2.8.1",
     "eslint": "^7.0.0",
-    "eslint-config-canonical": "^19.0.5",
+    "eslint-config-canonical": "^20.0.4",
     "gitdown": "^3.1.3",
     "glob": "^7.1.6",
     "husky": "^4.2.5",
diff --git a/src/rules/requireCompoundTypeAlias.js b/src/rules/requireCompoundTypeAlias.js
index f056c39b..996ef2fb 100644
--- a/src/rules/requireCompoundTypeAlias.js
+++ b/src/rules/requireCompoundTypeAlias.js
@@ -3,14 +3,36 @@ const schema = [
     enum: ['always', 'never'],
     type: 'string',
   },
+  {
+    additionalProperties: false,
+    properties: {
+      allowNull: {
+        type: 'boolean',
+      },
+    },
+    type: 'object',
+  },
 ];
 
 const create = (context) => {
   const always = (context.options[0] || 'always') === 'always';
 
+  const allowNull = !(context.options[1] && context.options[1].allowNull === false);
+
   if (always) {
     return {
       IntersectionTypeAnnotation (node) {
+        if (
+          allowNull &&
+          node.types.length === 2 &&
+          (
+            node.types[0].type === 'NullLiteralTypeAnnotation' ||
+            node.types[1].type === 'NullLiteralTypeAnnotation'
+          )
+        ) {
+          return;
+        }
+
         if (node.parent.type !== 'TypeAlias') {
           context.report({
             message: 'All intersection types must be declared with named type alias.',
@@ -19,6 +41,17 @@ const create = (context) => {
         }
       },
       UnionTypeAnnotation (node) {
+        if (
+          allowNull &&
+          node.types.length === 2 &&
+          (
+            node.types[0].type === 'NullLiteralTypeAnnotation' ||
+            node.types[1].type === 'NullLiteralTypeAnnotation'
+          )
+        ) {
+          return;
+        }
+
         if (node.parent.type !== 'TypeAlias') {
           context.report({
             message: 'All union types must be declared with named type alias.',
diff --git a/tests/rules/assertions/requireCompoundTypeAlias.js b/tests/rules/assertions/requireCompoundTypeAlias.js
index 3e116f3f..0a72856f 100644
--- a/tests/rules/assertions/requireCompoundTypeAlias.js
+++ b/tests/rules/assertions/requireCompoundTypeAlias.js
@@ -1,5 +1,15 @@
 export default {
   invalid: [
+    {
+      code: 'const foo: string | null = null;',
+      errors: [{message: 'All union types must be declared with named type alias.'}],
+      options: [
+        'always',
+        {
+          allowNull: false,
+        },
+      ],
+    },
     {
       code: 'function foo(bar: "A" | "B") {}',
       errors: [{message: 'All union types must be declared with named type alias.'}],
@@ -65,6 +75,18 @@ export default {
     },
   ],
   valid: [
+    {
+      code: 'const foo: string | null = null;',
+    },
+    {
+      code: 'const foo: string | null = null;',
+      options: [
+        'always',
+        {
+          allowNull: true,
+        },
+      ],
+    },
     {
       code: 'type Foo = "A" | "B";',
     },