When you have children, it is more important than ever to have life insurance. You want to support them if something should happen to you. Death benefits from a life insurance policy can cover a mortgage, pay for your child's college education and help you support your family.
What are the different types of life insurance?
The two main types of life insurance are permanent life and term life.
Permanent Life Insurance
A permanent life insurance lasts for your lifetime and pays out after your death, when it occurs. There are different types of permanent life insurance, including whole life, universal life, indexed universal life and variable universal life.
Term Life Insurance
A lifetime policy is temporary. It is designed to cover you for a certain period of time, for example 10 years, 20 years or 30 years. This is the cheapest type of life insurance. You can buy more coverage at a lower price with longevity.
What type of life insurance is best if you are starting a family?
Life insurance is usually a good option for new parents. It is affordable, allowing you to buy enough coverage to protect your family. Make sure the term you buy is long enough to cover the years when you raise a family, pay a mortgage and save for retirement.
Do both parents need life insurance?
If both parents work, they both need a life insurance policy to reimburse income in the event of death. Even if one parent is the breadwinner and the other stays at home with the children, it is best to have life insurance for both. A home parent who does not earn an income still provides valuable services. Should that parent die, the surviving parent would have to pay to replace these services.
Are you going to buy life insurance for your children?
Children have no dependence on them financially, so why would they need life insurance? Child insurance is usually purchased by parents or grandparents of the child for one or both of two reasons: 1) to guarantee the child's future insurance; or 2) to act as an investment vehicle for the child.
Child life insurance is sold as a permanent full policy, usually with a lower coverage amount (less than $ 50,000) and locked-in premiums. These insurances usually include a guaranteed purchase option that allows the child to purchase some coverage in the future at a locked health classification, without a medical examination.
The entire life insurance is based on cash value. Some of the premiums paid increase the account over time. You have the opportunity to retain ownership of the policy or let the child take ownership at a certain age. You can borrow against the insurance's cash value or withdraw money from it. When your child grows up, he or she can withdraw money – give up the insurance and get the money.
If you are starting a family and need more information about life insurance, our friendly agent can help you.