What Is Family Life Insurance? 6 Things to Know

What Is Family Life Insurance? 6 Things To Know

August 11, 2020Life Insurance

A personal life insurance policy is a proven way to ensure financial security for your loved ones. A lesser-known, but equally beneficial strategy is to take out a family life insurance policy, which insures multiple people in your household.

1. Many People Can Benefit

If you have a spouse or partner, chances are that you share responsibilities, such as earning income and caring for children. Thus, it may be wise to insure both yourself and your partner so that your household can remain financially secure in the event of death.

People who have children or who depend on their parents for money can also benefit from a family life insurance policy.

2. Separate Individual Life Insurance Plans Have Pros and Cons

One of the most obvious ways to insure your partner is to purchase separate individual life insurance policies for each of you. This will require that you apply for insurance separately, and you may end up with different plans and rates.

There are two types of individual life insurance plans to choose from: term life insurance and permanent life insurance. Permanent life insurance is more expensive, but it guarantees a cash payout when the insured person dies.

Term life insurance costs substantially less, but it loses its cash value after the term is over. Terms can last anywhere from 1 to 30 years. Most people choose term life insurance because of its lower cost.

3. Joint Life Insurance Policies Can Simplify Planning

Rather than purchasing separate insurance plans for yourself and your spouse, it may be simpler to take out a joint life insurance policy. A joint policy covers both partners at the same time, so you won't have to worry about managing multiple policies. Joint policies are typically permanent. This means that they may cost more than an individual term life insurance policy.

Some joint life insurance policies pay out after the first spouse dies, while others pay out after the second spouse dies. The type that you choose depends on how you wish your insurance proceeds to be used. For example, a second-to-die policy may be the way to go if you want the proceeds to pay for your estate planning costs.

4. Joint Life Insurance May Cover Clients With Medical Conditions

If you or your spouse has an underlying medical condition, you may have to pay considerably higher premium rates on a joint life insurance policy. The surviving spouse may have to continue to pay these higher premium rates even after the first spouse dies.

However, joint life insurance policies can sometimes provide coverage to people with medical concerns who may not be able to get a life insurance policy otherwise. If you or your spouse has previously been denied an individual life insurance plan due to a medical condition, then joint life insurance is worth looking into.

5. There Are Ways to Insure Your Parents

You cannot buy life insurance for your parents unless you can show that you depend on them for financial assistance. However, your parents can still list you as the beneficiary of their individual life insurance policies.

Another option is to purchase final expense insurance on your parents. This is a permanent insurance policy that is designed to cover the cost of your parents' funerals.

If your parents' death would cause you financial difficulties, you may be eligible to buy life insurance for your parents. This may apply to you if you depend on your parents for childcare or assistance with loans or mortgages.

6. Insuring Children May Be Easier (and Cheaper) Than You Think

Children typically do not need life insurance. However, in a worst-case scenario, a small cash benefit in the event of a child's death can help pay for funeral expenses and give you time away from work to grieve.

The easiest way to insure a child is to purchase a “child rider” on your own life insurance policy. A child rider covers all the children in your household at once, so you won't need to create separate policies for each child. A child rider with a few thousand dollars of coverage may cost only a few dollars a month. Even if the benefit is small, a child rider may be well worth the extra cost.

Get Help Finding the Best Life Insurance Quotes for Your Family As we have seen, there are many reasons to consider family life insurance. Purchasing an insurance policy on your family members may give you peace of mind and make you more confident about the future of your spouse and children.

With so many choices available, you want to be confident that you have made the right decision. Our life insurance comparison page is an independent online service that allows you to compare life insurance quotes in a matter of minutes, all from the comfort of your own home. Learn more today by contacting The Comparison Company.

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