The time to purchase life insurance is when you first start a family. You may already be aware that life insurance policies have many different types of features which are called riders. When you have a family, it is especially important to investigate the various riders that will provide benefits to each member of the family, both adults and children.
For families with children, this typically means that each parent, not just one, should have an insurance policy. Life insurance is even important for stay-at-home moms. Although most life insurance policies provide coverage for a family, it can be difficult to find a single policy that provides coverage for an entire family. So, let’s consider providing life insurance for a typical family of four.
Understanding Life Insurance Riders for Children
If you’re unsure about providing life insurance for your children, you’re not by yourself. A lot of people feel that life insurance for children is an unnecessary expense and even a little grim. Fortunately, it’s not necessary to purchase an individual policy for each child; you can easily add a child with a rider on your policy. Many insurance companies will let you have coverage up to $15,000-$25,000 for a child.
A child rider will provide coverage for funeral and burial expenses in the event of an untimely death. Many people are frequently surprised by the high cost of final expenses. If you have sufficient savings to cover these costs, a child rider isn’t necessary.
However, if you don’t have enough savings to cover funeral costs, a child rider is an inexpensive way to get coverage since the monthly premiums are only around $5-$10.
One benefit of having an individual policy for your children instead of a rider is that this policy can be converted to full coverage when they become adults. This conversion to adult coverage will take place even if a child develops health problems that might make it difficult or impossible to obtain coverage as an adult.
For example, let’s suppose your child has been diagnosed with heart problems or diabetes. These conditions will make it very difficult for them to obtain life insurance in the future. However, if you have already set up separate policies for them, any health problems that they develop would not cancel their life insurance. Getting insurance now for your children will help to protect their financial future.
Always, my first recommendation is to purchase adequate insurance for both you and your spouse before adding riders for children or buying separate policies for them. Your life insurance coverage is the most important while coverage for the kids is secondary or, quite often, not even necessary.
The other option aside from a child rider is to buy a child life insurance policy. These plans are unique because they are whole life insurance plans targeted towards parents.
These plans are whole life policies. You buy them for a very cheap monthly rate, and when your child turns 18, the policy is transferred to them. With some companies, they will double the coverage the day the child turns 18.
Here is the problem with some of those policies. They are going to be more expensive than a child rider, but you’ll get just as much coverage. Yes, your child will lose life insurance when they turn 18 with a rider, but a term policy will give them proper insurance at an affordable monthly rate.
As discussed previously, you and your spouse/partner should have separate life insurance policies if your goal is to have coverage for each family member. While either of you can add child riders to your policy, there is no such rider for a spouse/partner.
Now we come to our next topic:
Purchasing Individual Life Insurance Policies
You may be aware of joint insurance policies. Joint policies actually only cover two lives and not every company offers them. Recently, most people prefer separate life insurance policies. They are more convenient when there are children present and are less complicated in case of divorce.
Further, a joint policy, also known as a 2nd to die policy, will only pay out after both people have died. Although joint policies are usually cheaper, they are typically only used in very specific situations, such as leaving an inheritance. They are not useful to provide family protection of the breadwinner’s income.
The case FOR these plans is how cheap they are. Because they are insuring two people with one plan, they are going to be a good bit cheaper than a traditional style life insurance plan.
But just because they are cheaper doesn’t mean they are a wise choice.
Let’s imagine you had one of these second to die policies. Something happened to you or your spouse. At this point, your family would only have a single paycheck coming in, but they wouldn’t any money from the plan.
Purchasing separate life insurance policies is not particularly complicated. They can be purchased at the same time and from the same company or purchased from different companies. In fact, it pays to shop around since one spouse may find a cheaper rate at a different company than the one the other spouse is using.
There are very few situations where we recommend a family buying one of these 2nd to die plans. If you think they might work for you, there are a lot of various factors you’ll need to review. If you have any questions about these specialty plans, go ahead and give us a call.
Insurance for the Whole Family
If you want to protect your whole family with insurance coverage, you will need to find a mix of child riders and traditional insurance plans. It can get a little difficult to juggle all of those plans and give your family the insurance they deserve.
There are some companies out there which sell “family life insurance policies,” which are nothing more than a grouping of policies.
You want to protect your loved ones with an insurance plan, but you don’t know how. You don’t have to be an insurance expert to get the plans you desire.
You only have to be able to make one phone call.
With only one call, you’ll get rates from a bunch of companies with child riders. We can show you which carriers have child riders, how much they will cost, and which ones are going to deliver you the best protection.
Here is the best part, you don’t have to pay us a dime. Our customers get all of our advice and assistance for free.
You can use the quote tool on this website to compare rates from several different companies. You are also free to call us at 888-552-6159 to get more detailed information about the best life insurance coverage for your situation and receive a customized quote.