|Online Life Insurance||National Coverage||Online Application||View Rates|
|Yes||Yes||Try State Farm|
|Yes||Yes||Try AIG Life|
So, you’ve become a new parent? Or perhaps maybe just another time over. Whatever the case may be, you have a small person that you need to take care of for many years and often help them even beyond becoming an adult. It is important to consider how you can take care of that person if circumstances come when you’re not around. This means looking into getting a life insurance plan.
Some people think that life insurance is only something to consider when you get a lot older, but this is far from the truth. In fact, the sooner that you get a good life insurance policy, the better. The longer you wait, the more that your rate will continue to increase with each passing year. In addition, getting older can bring more health issues or unfortunate diagnoses, which can greatly increase your rates. Life insurance is incredibly important to think about when having children, as pregnancy can also affect the rates. If you are considering another child, it would be a good idea to get life insurance before your spouse gets pregnant because this has the potential for lower rates.
The Two Types of Life Insurance
There are two different types of life insurance, with these being Term Life Insurance and Whole Life Insurance. They both have their merits depending on the circumstances.
Whole Life Insurance
As the name implies, whole life insurance is permanent coverage as long as your keep up on your premium payments. This may sound appealing, but whole life insurance is significantly more expensive than the other type, largely because it also has a cash value component.
Term Life Insurance
On the other hand, term life insurance has a set term. After this term limit expires, the coverage expires as well. This may sound scary, but term life insurance is often what people most need. When it comes to life insurance, the concern is that those you leave behind are taken care of financially. So, if you are concerned about the time of your child’s upbringing, the term may only need to last until they are fully taking care of themselves. Term life insurance is more affordable and it is the most commonly chosen type.
When deciding on a type of life insurance, it just comes down to what your goal is. As mentioned above, term life insurance is often the best route if it is a finite time that you are concerned about. Whether it be the time of your children’s upbringing or the length of a 30 year mortgage, term life insurance will ensure that no one is left financially struggling or burdened after you pass. If you reach the end term of your life insurance, many companies will offer you the ability to convert to a whole life plan if you want.
What is the Right Amount of Life Insurance?
There also comes a matter of calculating how much life insurance that you will need. There are several factors that need to be taken into account when considering this. Firstly, take a look at what exactly would happen if your spouse were to pass away. Would that leave you with less income, no childcare, etc. Consider how this would affect your ability to afford your mortgage or rent, diapers, childcare services, and even further down the road, college. If we look at even just the costs of raising a child, the average cost from birth to age 18 is multiple hundred thousands of dollars on average. Taking a real look at all of this can help provide a view of what amount of life insurance you should be choosing. There are online life insurance calculators that can help provide a better overview of what amount you should get. Also, don’t try and lowball what you should actually have. Bottom line, hopefully nothing ever happens to you or your spouse, but it is better to be over prepared than under prepared.
Some may think that only one parent needs life insurance, but this is not true. Each person brings their own contributions to the family that can be lacking in the event of an untimely death. If only one person is working and they pass away, life insurance can help pay expenses. If the parent that is primarily responsible for childcare and other household duties passes away, the remaining parent may have to pay others to do these things while they work. While it is ideal for each parent to have their own life insurance policy, there are also joint policies available.
Who to Name as Your Beneficiary
During the process of obtaining your life insurance policy, you will have to decide on a beneficiary. Typically, it is often best practice to set the other parent as the main beneficiary. Although, you should also set up a contingency (secondary) beneficiary in the event that something happens to both of the parents. It is not a good idea to set a child as a beneficiary because they cannot collect the benefit. If this happens, it will have to go through the process of the court choosing a custodian for the benefits, which can take a good amount of time. It is better to work with a lawyer to set up a custodian for the benefits that allow the child to use them when they come of age. Aside from that, the custodian will also be able to access the funds for reasonable expenses for the benefit of the child.
Life Insurance Through Work
Some places of employment will offer life insurance policies for their employees. This is great, but it is usually not enough. Parents should take out their own life insurance policy to ensure that it will meet the financial necessities left behind. Plus, this will only add further benefit with both policies in the case that the person does pass. The other thing to consider with job life insurance is that the coverage will only last if you remain at the job. Meaning, if you quit, get laid off, or get fired, you will lose that coverage.