Is family life insurance a good idea?

Every family should have some kind of financial protection in place so they can carry on if something happens to one or both parents. That said, the right coverage is different for every family. When shopping for life insurance, consider your family's size, budget, financial responsibilities, and future goals to find the insurance company and policy that works best for you.

How much does life insurance for a family cost?

Life insurance rates depend on a number of factors, like the type of policy you buy, how much coverage you need and how long you need it for, and your age and health. For example, the cost to buy a joint couple policy is likely to be different than buying two individual policies. A life insurance agent can help you figure out the best options for your unique needs and budget.

Family Life Insurance

Make sure your family is protected when it counts.

The Importance of Life Insurance for the Whole Family

Once you have a partner and children in the picture, you know it’s time to get covered. But how does life insurance for a family work? Do you all need to buy your own policies? What kind of coverage is best for your crew?

Life insurance provides financial protection for your family, which is especially crucial when you have a spouse and children depending on your income. When you apply for life insurance, simply list your family members as your policy beneficiaries. That way, if you die while your life insurance policy is in effect, your insurance company will provide a cash payout called a death benefit to your family. This money comes with no strings attached and can help them pay for day-to-day expenses, replace your income, cover funeral costs, or take care of leftover debts.

What is the Best Type of Life Insurance for Family Members?

Generally, there are two options when it comes to life insurance to help protect a family: term life insurance and permanent insurance. Term life offers coverage for a set period of time, usually from 10 to 30 years, and is the most affordable option. Term life insurance makes sense for many families, since it’s cost-effective and can provide coverage during the years your children are in the house or you’re paying off a mortgage.

Permanent coverage is a lifelong policy with an extra cash value component, which you can borrow from or use as collateral for a loan. You can choose from whole life, where your cash value will grow at a fixed rate, or universal life, where your cash value is based on a variable interest rate. Permanent life insurance policies are more expensive than term life, but can be a good fit if you have financial responsibilities that will last your entire life, like caring for a special-needs child.

How Much Life Insurance Does My Family Need?

Many families buy insurance to cover them until the major expenses that come with raising a family are done. For example, if you have a family of four, you’ll probably want coverage to last until your youngest child is financially independent. For your ideal coverage amount, consider all your financial obligations, including mortgage payments, day-to-day expenses, debts, and upcoming college costs.

It can be difficult to predict all your future expenses, which is why young families often choose a 30-year term life policy. This option typically provides maximum protection at a more affordable rate than permanent coverage.

How to Buy Family Life Insurance

Depending on what you want your plan to do, there are lots of ways to buy life insurance for a family.

Life insurance for yourself: Buying an individual policy is a smart first step for most people. You can choose between term life and permanent policy options to protect your partner and kids if something happens to you.
Life insurance for your partner: Your spouse or partner can purchase their own policy, or you could explore joint options like first-to-die or second-to-die insurance. First-to-die policies offer a payout after the first partner dies to help the surviving spouse and family to cover costs. Second-to-die, or survivorship life insurance, pays out when the second spouse dies and is often used to cover estate taxes or leave a legacy to the next generation.
Life insurance for a child: You might want life insurance for your children to make sure they can qualify for an affordable policy later or cover any funeral costs if something happens to them. Adding a child rider to your own policy, which covers your children until they become adults and often lets them switch to an individual plan, is the most common option. A child rider also pays out a small death benefit so you can take care of any final expenses if you need to.

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