When you start a family, it’s time to get life insurance if you have not done so already. As you may already know, life insurance policies can come with many additional features, known as riders. For families, it is particularly important to look into riders that benefit every family member and provide coverage for both the children and adults.
Nevertheless, when there are children involved, this generally means both parents—not just one— need insurance policies, even stay at home moms can benefit from having life insurance. While nearly all life insurance policies serve to cover a family, it is extremely difficult to find one that will cover the entire family. So, let’s take a look at getting life insurance for the typical family of four.
Understanding Child Insurance Riders
If you’re feeling a bit torn over whether or not to get life insurance for your children, you’re not alone. Many people may feel that life insurance for a child is unnecessary and even a bit morbid. Instead of purchasing a separate policy for your child, you can simply add them as a rider on your policy. Many life insurance companies will allow you to have up to $15,000 or $25,000 of coverage for your children. The benefit of having a child rider is to cover funeral expenses should the worst happen. If you have savings and can cover this on your own, it really isn’t necessary, but if the bank account won’t cover these costs, a child rider can be inexpensive, costing around $5-$10 per month.
The benefit of having a separate policy for your child as opposed to a rider is that your children will be able to convert their coverage into full adult coverage once they are grown, even if they later develop health problems that would otherwise make it difficult or even impossible for them to become insured. For example, if your child should develop diabetes or be diagnosed with a heart problem, they will face difficulties when trying to get the life insurance they want in the future. But if this happens after you get them an insurance policy, they are essentially in the clear. So, by insuring your children now you are helping to insure their financial future much further down the road.
If the unthinkable should happen, your child’s insurance coverage will help cover funeral and burial costs, as well as other post-mortem expenses. Many people are often shocked by the amount of these costs, but you can make everything a lot easier by making sure all family members are covered with life insurance.
Before buying a policy for your child or adding a child rider, I always recommend that you first have insurance for you and your spouse, as it is most important that you are covered, and any coverage on your kids is secondary, or in many cases not needed at all.
As mentioned above you and your spouse/partner will need separate life insurance policies if you want everyone in your family to be covered. While one of you can have child riders on your policy, there are generally no such riders for a spouse/partner.
This brings us to our next topic:
Getting Separate Life Insurance Policies
You may have heard of joint insurance policies. However, separate life insurance policies remain the most popular choice in today’s times, and they are much more convenient when you have children. Joint policies only really cover two lives, after all, and again, not all companies offer them. In the case of divorce, having separate policies also makes things less complicated. In addition a joint policy, also called a 2nd to die policy only pays out after both people die – while these policies are cheaper they are usually only good in specialized situations – like leaving an inheritance, but are not good for family protection of the breadwinner’s income.
There’s really nothing extra complicated about getting separate life insurance policies. While you can buy them at the same time and with the same company, this is not necessary since they are two different policies. In fact, one spouse may find that they get cheaper rates through a provider different than the one their spouse is using.
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