There are few things worse than the peace of mind knowing that your loved ones are covered just in case, and life insurance is one of the best ways to offer this. Selecting a life insurance policy for your family is no simple task, but once you learn about the different possibilities it gets a lot easier. To explore the greatest life insurance plans for families, let me take you on a journey through this topic.
What Led me to Life Insurance
It began when I became a parent. Life had turned into a front-page story, and every choice I made was heavier—more important. It was at the point where the future of my family became a constant thought, that I started to look for life insurance options. Trust me: From (virtually) life-insurance-clueless to practically advising. It provides insights into how life insurance really is important, most especially for families.
So what exactly is Life Insurance?
For those of you who, like otherwise sane people gone astray, are just dipping your toes into the cool, refreshing waters of life insurance, let me lay it out for you. At the end of the day, life insurance is just a contract between you and an insurance company. You pay a premium, and they promise to give your family or whoever you have chosen as a beneficiary (if it is not your family) an amount of money as a lump sum once you have died. On the surface, it seems simple enough, but there are all types of plans and options that can swing you around into an orbit. The best plan for you will depend on your family’s needs, your financial situation, and what else you want to achieve long term.
Best Life Insurance for Families
You will see the best life insurance plans in a minute, but first, let us review the two primary types of life insurance: Term Life Insurance and Permanent Life Insurance.
Term Life Insurance
Term life insurance is one of the most popular types because your coverage lasts for a particular length of time—often 10, 20, or 30 years. Term life insurance is frequently cheaper than permanent insurance and is therefore more easily affordable for many families, particularly those with a tight monthly budget. There is a catch, however: If you survive the duration of the policy term, it ends and you do not receive any money at all… unless yours was built with a return of premium rider.
My initial go-to option was term life insurance. But I rationalized that those were good years to have a plan in place for. Also, I was drawn to the fact that it was a plain extension. The following are a few advantages of term life insurance:
- Affordable: More cost-effective than permanent life insurance policies.
- Choice: Select the term that aligns with your family’s life-line.
- A No-Brainer: Keep things simple, with no convoluted investments to fret over.
Permanent Life Insurance
As opposed to term life insurance, permanent life insurance—such as whole life, universal life, and variable life insurance—covers your insured for most of his or her entire life. Although these plans cost more, they also accrue a cash value that you can borrow against in life or take as a withdrawal. The biggest pro to IUL (Indexed Universal Life Insurance) is that your family or beneficiaries will get a payout whenever you die.
I liked the investment component, so I considered a permanent life insurance policy. I was able to kill two birds with one stone—taking care of my family and securing a retirement fund.
Top 7 Family Life Insurance Plans
With the fundamentals out of the way, let’s jump into some life coverage options that are particularly useful for families. Remember: what plan is “best” for you depends on your family’s needs and your budget.
- Haven Life Term PolicyHaven Life provides expansive and affordable term policies. You are able to apply online, which is a positive. I really liked the simplicity of how this plan was applied for. Coverage is up to $3 million, and in most cases, it does not require a medical exam.
- Why it’s great for families:
- Premiums competing with most family budgets.
- Process is easy, and does not require a medical examination in some cases.
- Reliable products for family-friendly peace of mind.
- Why it’s great for families:
- Northwestern Mutual Whole Life InsuranceIf you are looking for permanent insurance, the whole life policy from Northwestern Mutual is something to consider. It’s more expensive than term life, but you get coverage for life and can grow a cash value. With Northwestern Mutual, you can be assured that a financially strong carrier will be there for your family in the long run.
- Why it’s great for families:
- Provides lifelong protection so your family will receive a payout no matter when you die.
- Allows for flexibility, as one is able to accumulate cash values later in life.
- Extensive insurance experience and good reputation.
- Why it’s great for families:
- New York Life Family Protection PolicyNew York Life offers family protection with options to tailor your coverage. You can opt for their “Family Protection” where you can bundle your term and whole life insurance into one plan. Keep a smaller whole life policy in place into old age to cover your lifetime needs, along with a larger term policy or two running until your kids are adults and the house is nearly paid off.
- Why it’s great for families:
- Choices you can adjust to suit your family as it evolves.
- One of the most trustworthy companies with a good claims-paying history.
- Plans that change as your needs do so you’re never tied to only one type of insurance.
- Why it’s great for families:
Things to Consider While Selecting a Life Insurance Policy
However, choosing the correct life insurance policy for your family is dependent on a number of factors. Here are the items on my list that I thought would be helpful to share:
- Your Family’s Financial NeedsIf you were not around, how much would your family need to live in a similar fashion and environment? This was my first question. I did not just want to cover my final expenses; I wanted to ensure that my children could still attend college, the mortgage would be paid off, and my spouse was not left financially distraught.
- The CostLife insurance is relatively expensive, so you will want to find a policy that fits into your budget. While term life policies are typically cheaper, permanent life insurance provides you with some lifetime benefits.
- Length of CoverageWould you like it for only a certain amount of time, say until your kids are grown and gone, or do you want term for life? I chose a term life policy to start because it had potential for conversion later to a permanent policy.
- Health and AgeThe cost of your premiums might be affected by your current health and age as well. I got life insurance in my early 30s, and the policy was for such a small amount that premiums were very low. For someone who is older or has health problems, the premiums could be more expensive.
My Decision Process—Practical Experience from a Philosophical Ninja!
I remember the night my husband and I sat and had a conversation about life insurance… it IS something you want to bury in the backyard, but unfortunately, for most of us, it is necessary. We had recently purchased our first home and were a few weeks away from having our second baby. We were hit hard by the realization that we needed a safety net. For weeks, we compared policies and premiums on different platforms. After months of discussion, we opted for a 20-year term life insurance, and it felt wonderful to know that if something happened, our children would be protected until they were old enough to fend for themselves.
Questions You Might Like to Ask: Family Life Insurance FAQs
- How much life insurance is enough? A standard recommendation is to buy a policy equal to 10-12x your annual pay. Of course, values depend on your family’s activities and any debts or financial plans for the future.
- Is there life insurance without a medical exam? Yes! Some companies now provide no-exam policies, but the cost is generally a bit more.
- What if I haven’t died by the end of my term life insurance? If you survive your policy, it will expire, and so will your coverage. Nonetheless, many policies allow you to renew or convert them to permanent life insurance.
- Life insurance for both parents? Absolutely. Even an at-home parent has such an important role, and in the event of their death, life insurance can help cover expenses like daycare.
Final Thoughts
Life insurance is one of the most critical financial decisions you will make for your family. It is not easy; it’s a huge and often ongoing process, but the serenity it gives you is something no money can buy. I urge you to sit down, do some thinking about what your family needs, and ponder it over. Start searching…
Life can be highly unpredictable, but with the correct life insurance policy, you can ensure that if something were to suddenly come your way, you are leaving those most affected well provided for.