When you find out you’re going to be a parent, a million thoughts and emotions hit, eventually leading to the question: “Oh man, what if something happens to me!?” Life insurance is the safety net many parents put in place in case anything happens to them, but according to a recent survey, only 10% of younger families report having enough life insurance coverage to take care of their families’ needs should they pass.
Twenty-and-thirty-somethings starting families should get life insurance. And they should get it soon, too! Because premiums go up as you get older, the longer you wait, the more you’ll pay.
Coverage Types – Simplified
Term – a Term Life Insurance policy is insurance coverage that will pay a specified amount to beneficiaries in the event of your passing within a specific time period, assuming all monthly or annual premiums are paid. The premium amount is locked in for the length of the policy and is generally more affordable than other coverage options.
Permanent – a permanent policy does not have an expiration date as long as monthly/annual premium payments are made. Various types of permanent insurance include whole, universal, variable universal life policies that combine various methods for accumulating interest or cash value on the premiums paid throughout the time of the coverage. Permanent insurance, because of its cash returns and lack of expiration, is generally more expensive than term life insurance options.
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Why Term Insurance Works For Most Families
- While each life insurance coverage option has its pros and cons, term life insurance offers young families more affordable rates and consistency than permanent policies.
- Whole life policies tend to benefit the individual selling it more than the client, frequently resulting in less than a 2% yield without guarantees.
- Lower premiums mean that more cash is available for monthly expenses when parents are building and budgeting for their family.
- It is easier to add term coverage, as needed, rather than risking rate variability dependent on investment returns as the family’s financial situation changes or improves over the years.
- It’s easier to qualify for lower monthly premiums earlier in life when adverse health issues are at their lowest and life expectancy is still reasonably high, compared to shopping for first coverage later in life.
- New data innovations in term life insurance underwriting and risk modeling have created additional savings that reward healthy lifestyles more common in younger individuals and new parents.
- Comparing term life insurance rate quotes is fast and easy with digital companies designed to work more nimbly with more top-rated carrier partners than local brokers that only represent a small handful of insurers.
Evaluating all of the life insurance coverage options available can seem overwhelming. Work with a professional, licensed agent or advisor to determine your financial goals and coverage needs. Find a coverage option at an affordable life insurance rate that rewards your financial goals and healthy lifestyle.