Family life insurance

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A family life insurance policy can be designed to suit your needs to ensure that you are financially prepared for any unexpected tragedy. In the event a member of the family passes away, the remaining beneficiaries will receive a death benefit. There are many types of life insurance for families, such as term life for a certain period of time and whole life that never expires. You can pick and choose the type of policy and the coverage amount to suit the financial needs of the remaining family members.

If you are looking for family life insurance, this article might help you understand what family life insurance is, what you can expect from obtaining a policy and why family insurance is or is not right for you. As with homeowners or auto insurance, life insurance has coverages unique to each person’s life and goals. Explore how family life insurance plans work and how to find a policy that works for you.

Why you should buy a family life insurance plan

Family life insurance helps to secure your family’s financial future when the unexpected occurs. At a minimum, the death benefit can cover costly funeral expenses. But it’s also useful in taking care of major debt and helping replace income in the event one or more family members pass away.

Some people opt to take out a term life insurance policy, which covers you for a period of time (usually 10 to 30 years) and usually comes with a lower premium. It pays out a death benefit if you pass out during that coverage time frame. But if you don’t pass away during that time frame, you won’t receive anything when your term expires.

Another option is whole life insurance (also called permanent insurance). Premiums are higher than term insurance, but you’re covered for your entire life. Your policy may also come with a cash value component, which can be part of your family’s larger financial plan.

Buying life insurance policies for parents

When you’re a parent, a life insurance policy gives a level of security in case you or your spouse dies when you still have kids at home. It can help to replace income when a working parent passes away unexpectedly. And, for a stay-at-home parent, the death benefit can help cover daycare costs if they’re no longer here to care for the kids. Think about the value of your income, debts and other relevant expenses when figuring out how much life insurance you may need for each member of your family.

Term life insurance is more affordable for young families and can provide comfort during a time of life with a lot of expenses. But other policies, like whole life insurance, work for long-term financial planning. Plus, the cash value of a whole life policy can serve as a safety net in case you need to tap into your funds during a financial emergency.

Another consideration is getting a joint life insurance policy rather than individual policies for each parent. One option for this is called a first-to-die policy, which pays out the death benefit when the first spouse dies. It may save you some money over purchasing two separate policies. The other option is a second-to-die policy, which pays out the benefit after both spouses pass away. It may help lower your beneficiary’s tax burden.

Joint life insurance policies

Joint life insurance usually falls under a permanent life insurance, which is effective for as long as you pay the premiums. It covers multiple people and can be structured to build cash value and yield a tax-free death benefit. However, there is also a joint life insurance policy that expires after 20 or 30 years like term life insurance.

Joint life insurance policies are not as common as individual insurance, but it may be right for couples who will both be insured regardless. In some cases, buying a joint policy can be cheaper than if two individuals had separate policies. The two different types of joint life insurance include first-to-die life insurance, where the benefit is paid when the first of the two spouses dies, and second-to-die life insurance, where the benefit is paid when both couples die.

The pros of having a joint life insurance policy is that it can be cheaper due to less underwriting labor. Additionally a joint life insurance policy offers a survivorship policy. This means that the death benefit will take longer to pay out since both of the people who are insured must die.

However, there are cons to joint life insurance policy. You may want to reconsider if this policy is right for you and your spouse if one spouse is not in good health condition as it can be more expensive. Policyholders of joint life insurance may also need to wait a longer time before the death benefit can be paid out. Lastly, the joint life insurance policy may not be right for you if you have doubts about your relationship with your spouse, as a divorce can make the process of splitting the joint insurance complicated.

Buying life insurance policies for children

Most families don’t consider getting life insurance for their kids. After all, they don’t contribute financially to the household and they are usually at a lower risk of death than older individuals. But there are some situations where it could be helpful. The first reason would be to take out a small policy to cover final expenses such as a funeral in the event a child has an untimely passing.

Another reason is to lock in an affordable whole life premium at a young age before any pre-existing conditions appear. That could make it expensive for a grown child to get his or her own insurance later in life. Instead, you can just transfer the policy to your child when they turn 21 years old.

Can you buy life insurance for your parents?

Yes, you can purchase life insurance for your parents to help cover any expenses they may leave behind. Buying family life insurance for your parents can help them (and you) financially in a number of ways. For example, a death benefit can help the surviving parent if they largely rely on the other for retirement income or other benefits. An accelerated death benefit rider helps them tap into their policy funds to pay for long-term care. Alternatively, if you’re named the beneficiary for a standard life insurance policy, you’ll receive the benefit when the policyholder passes away. This can help replace any income you’ve lost or expenses you’ve incurred if you act as a caregiver in their final years.

Frequently asked questions

What is not covered by life insurance?

There are certain circumstances that are not covered by most standard life insurance policies. Death caused by war and suicide are two causes that usually nullify someone’s ability to receive the death benefit. Some policies also don’t cover deaths from an airplane accident. These are things to consider when reading your policy’s fine print.

How does term life insurance work if you don’t die?

It depends on the type of policy you have. With a term life policy, you won’t receive any type of benefit or refund if your policy expires and you’re still alive.

Who needs life insurance the most?

It’s smart to prioritize getting family life insurance when you have dependents who rely on you. This is true for both working and stay-at-home parents because either your income or your role in the family needs to be replaced somehow if you pass away. For older parents, life insurance can help cover expensive medical expenses and pay off debt that your survivors may not be able to afford when you’re gone.

If you have no dependents or don’t have any type of financial insecurity, a life insurance policy may not be worth the price. Children also frequently don’t need life insurance. You may consider an educational savings account that comes with tax benefits if you’re looking for a way to save money for their future.

Written by
Grace Kim
Insurance Contributor
Grace Kim has two years of experience in writing for finance and insurance domains such as The Cheapest Car Insurance Companies in New Jersey at Bankrate and She has written about auto, homeowners, renters and life insurance. She holds an M.Sc from New York University in Corporate Communications and has spent most of her professional experience writing about finance and tech topics.