Family Life Insurance

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    Family Life Insurance: How To Choose The Best Protection

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    Getting life insurance for yourself will protect your family’s financial future in the case of your death – but is it the best protection for your whole family? Just insuring yourself isn’t enough. To fully protect them, you’ll need life insurance for all your family members. That’s where family life insurance comes in. 

    While an individual life insurance policy guarantees a payout in the event of your death, it does nothing in the event of your spouse or child’s death. If you want your whole family to be protected, you’ll have to get a family life insurance policy. 

    In this guide, we’ll go over the best options for family life insurance! We’ll discuss how life insurance can protect your family, what you need to know before getting them insured, as well as how to assess your family’s risk factors.

    What Makes Family Life Insurance Different From Individual Life Insurance?

    An individual life insurance policy means that the life insurance company only pays out the death benefit in case of your death. However, an individual policy doesn’t pay out anything in case of your spouse or child’s death. This is what sets apart individual life insurance from family life insurance. 

    A family life insurance policy provides coverage for your spouse and children. Though it covers your entire family, there’s a difference in how the protection works. Generally, in family life insurance the principal is covered by a whole life policy which means you’ll have coverage for life as well as a cash value investment. Your family will also be protected, though to a lesser extent by a term policy.

    In the event of your death, the death benefit afforded by your insurance will help your family financially during an undoubtedly tough time. Family life insurance affords you financial support in the event of your spouse or child’s death. Even if the death benefit is smaller, you’ll still likely be able to pay for their funeral and take some time off work to grieve. 

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    The Two Types Of Family Life Insurance

    • Term life insurance: This type of life insurance protects you for a certain period. This means your death benefit is only paid out if you die while the insurance is active. This life insurance coverage expires when the term is over, although you can opt to renew for another term or convert it into a whole life insurance policy.
    • Whole life insurance: Sometimes called permanent life insurance, having this policy means you have life insurance coverage until your death. Generally more costly than a term life insurance, whole life insurance also allows you to invest in its cash value component. This cash value accrues interest and you’ll be able to take money out of it for various purposes.

    How Can Insurance Riders Protect My Family?

    Insurance riders add protection to your existing policy for an extra cost. While your premiums may increase, you’ll be able to benefit from the extra protection it affords you. By choosing the right riders, you can protect your family even more comprehensively.

    Living benefit or accelerated death benefit riders are useful if you suffer from a terminal illness. This rider uses part of your benefit to pay for your medical care in life, taking the burden off your family. 

    An accidental death and dismemberment rider could provide extra peace of mind if your job is high-risk. For an increase in premiums, your beneficiaries will be paid a larger benefit in case of your accidental death. 

    Riders can be a more affordable alternative to purchasing policies for your entire family. There are spousal and child riders that can be added on to your policy, granting limited coverage in case of your spouse or child’s death. However, keep in mind that the benefit is lower compared to getting full-fledged insurance policies for them.

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    Considerations Before Getting Insured 

    Stage Of Life

    Your life insurance needs will vary depending on your age and where you are in life. Your needs when you’re young and single will be different compared to several years later when you’re married with children. Make sure you know what your life insurance needs are at your current stage of life. 

    Likelihood Of Illness And Disability

    Depending on your line of work and medical history, you may be at risk of experiencing a critical illness or injury. Suffering from either of those would likely mean that you wouldn’t be able to support your family for a long time.  In case you suffer a critical illness or become disabled, consider adding riders to protect your family better. 

    Duration Of Coverage

    Decide on what you need life insurance for and determine how long you want to be insured. If you’re looking for temporary protection to pay off a mortgage or keep your children protected until they grow up, consider term life insurance. Conversely, if you need life insurance for as long as you live, then a whole life policy may be better for you. If you’re still unsure how long you need life insurance for, consider getting a policy that allows you to convert a term life insurance into whole life insurance or vice versa.


    How many people do you need to financially support? Consider your spouse’s income as well as the needs of your child. Differing family circumstances will lead to different kinds of protection. 

    Insurance Payout

    Calculate how much money your loved ones need to keep their lives going without you. Aside from everyday costs like food and utilities, also consider large expenses such as student loans if applicable. While it’s tempting to go for a very large death benefit, you need to be able to afford to pay premiums as well. Strike a good balance between the amount of your benefit and the premiums you need to pay.

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    Assessing Your Family’s Risk

    When applying for life insurance, the insurer goes through a process called underwriting. In this process, the insurance company assesses the applicant’s risk and categorizes them into one of several classes. This risk categorization takes into account the applicant’s age and medical exam results, among other factors. By categorizing the applicants by risk, the insurer knows how much they have to pay for their premiums. To better estimate your family’s premium payments, it’s important to know where your family members fall into this categorization.

    • Preferred Plus or Elite are the lowest-risk applicants. Generally, people who are in this class have excellent health and are usually younger with very few causes for concerns. 
    • Preferred applicants have slightly higher risk. Their health is generally excellent, but there may be some small red flags such as higher cholesterol. 
    • Standard Plus applicants generally have above average health. They have good health but several possible red flags such as blood pressure or BMI that’s outside the ideal range.
    • Standard applicants generally have average health. They’re usually restricted from less risky groups due to past health issues or medical issues in their family. 
    • Substandard applicants are the riskiest. Due to their risky past or current health issues, they are generally charged higher premiums. Some life insurance companies also have another category for smokers that pay significantly higher premiums.  
    • A guaranteed issue policy is offered by some life insurance companies, allowing you to skip the medical exam entirely. However, this is one of the most expensive insurance products and should only be used as your last option for life insurance due to age or severe medical conditions.
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    Alternatives To Family Life Insurance

    Choosing a family life insurance policy isn’t the only way you can protect your family with insurance. In this section, we’ll go over alternatives to a family policy that you can choose to protect your loved ones. 

    Individual Life Insurance For Spouses

    Individual life insurance policies mean that you and your spouse apply for separate policies. Having two life insurance policies means that your beneficiaries will receive two death benefits upon your deaths. Individual policies may also be beneficial if you need different levels of protection. One thing to keep in mind is that having two policies could be more costly since you need to pay two insurance premiums. However, if you split up with your spouse you’ll both still be insured individually.

    Joint Life Insurance For Spouses

    A joint life insurance policy means that you apply for one policy that protects both of you. A joint policy works best if you need the same level of protection for the same time period. You’ll also be able to save more by paying joint premiums. However, most joint policies operate on a first death basis. This means that your protection will expire once the first partner dies, leaving the survivor to apply for a new insurance policy afterward. 

    One more thing to think about when getting a joint policy is what happens if you split up. If you’re insured by a joint policy, things become complicated. With a few exceptions, you can’t split a joint policy which means both of you will need new individual policies. If splitting up while holding a joint policy is a concern, check with your insurer for separation benefits.

    Child Life Insurance

    Buying life insurance for your child may sound like an unnecessary expense, but there may be legitimate reasons to insure them. A small payout in case of your child’s death may help you pay for their funeral and allow you some time off work to grieve. Another reason is to protect your child if they develop a medical condition that might make insuring them harder. By insuring them early in life, you’ll protect their insurability in the future. 

    A full child life insurance policy works like a whole life insurance policy. Like an adult’s whole life policy, your child’s policy can be a savings vehicle by investing in its cash value. This cash value can later be used for various purposes, such as college expenses or buying a home.

    Child Life Insurance Riders

    As a more affordable alternative, you can choose to have a child rider on your own life insurance. These are relatively cheap and generally covers all the children in your household. This rider can also be converted into a child life insurance policy if you decide they need their own life insurance. 

    Final Expense Insurance

    While family life insurance typically only covers your spouse and children, life insurance can also protect your parents. If your parents are elderly, consider getting them a final expense insurance policy. This type of insurance is generally used to cover end-of-life expenses such as burial and any medical bills they may leave behind. This way, you can ease the financial burden of your parent’s death. 

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    Tips For Getting The Most Out Of Your Family Life Insurance

    • Consider getting insured at a young age. As you age, health issues may cause your premiums to rise and become more of a financial burden. 
    • Consider who you’re protecting. Life insurance for yourself will differ from insurance you take out for your elderly parents. Know who you’re protecting and find benefits that can help them.
    • Live a healthier lifestyle. If you can prove to your insurer that you’ve improved your health, they may be willing to reduce your premiums.
    • Calculate your death benefit wisely. Consider your dependents and how much they’ll need to be financially stable in your absence. 
    • When choosing beneficiaries, it’s best not to choose your underaged child. Either choose your spouse or a close relative as your beneficiary. If you want your child to receive the death benefit directly, set up a trust so your child can receive it when they become of age.
    • If you’re getting insurance to protect your child, be sure to factor in education expenses. Make sure that your insurance payout can help them afford a good education.
    • Consider getting insurance for both yourself and your spouse. If both of you are breadwinners, losing one partner can be detrimental to your family’s financial stability. Even if one of you is a stay at home parent, the insurance payout can cover the cost to replace the services they once provided.
    • Consider your current and future needs. Seek flexibility in your insurance, in case you may need to alter it in the future. For example, when you’re a young couple you might be fine with term life insurance but as you age and have children, whole life insurance may be desirable.
    • Be sure to regularly review your insurance. Your coverage needs may change after a major life event, such as having children, deaths, or major changes in health.
    • Know your options before switching or making changes to your life insurance policy. If you switch policies, make sure your new policy is active before your previous one is canceled.
    • Shop around for insurers that offer the best rates. Compare rates with other insurers to make sure you’re getting the best value for your money.
    • Research life insurance companies and make sure your life insurance company is reliable.
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    There’s no one size fits all solution when it comes to insuring your loved ones. Differing family compositions means that what works for one family might not work for you. Therefore, it’s important to learn what kind of protection is on offer to protect your loved ones’ financial future.

    Shopping for family life insurance can be challenging, and we at Wesley LLC know just how complicated it can be. If you need someone to guide you through, our team can advise you on the best options for protecting your loved ones. Contact us today for more information!

    Written By Cameron McDowell
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