In her most recent professional advice for MoneyGeek, Christina provided tips, insights, and advice for navigating the purchasing of family life insurance for all types of families.
Read Christina's full excerpt below! You can also read the whole article on the MoneyGeek website.
What advice would you give to those looking to purchase life insurance for their family?
We suggest working with a financial planner first to determine whether or not you actually need life insurance. It is important to determine how much life insurance your family may need and what type of insurance might work best for your specific situation. A financial planner can help by creating a financial plan, which can be used to identify risks that could potentially be mitigated using life insurance for different scenarios. It's important to realize that your family is unique, and what another family might have for life insurance is not necessarily suitable for you.
We also recommend not overlooking a stay-at-home partner/parent when implementing a life insurance plan. While they don't have the traditional "income "to be replaced, they have an inherent value to the household. And to replicate your partner's financial value without having life insurance can be difficult and costly.
Finally, families need to secure coverage at a younger age to safeguard insurability in the future. Being diagnosed with certain health conditions can raise your premium or even disqualify you entirely from certain types of life insurance. Taking action now can also help you minimize premium costs later.
For low-income families, what are some of the most suitable life insurance options?
Comparing temporary (term) life insurance options is often the most suitable for low-income and younger families. Families that are living paycheck-to-paycheck may not think that life insurance premiums are the most pressing costs to cover, but a financial planner would review a scenario in which a two-income household suddenly becomes a one-income household due to the early death of one of the partners. It would quickly become apparent that their lifestyle (or had hoped for) would be nearly impossible without life insurance. Prioritizing life insurance premiums is a critical way to help protect what your family has now and what you’re working towards.
When comparing term life insurance options, a few questions to keep in mind are:
- How long is the greatest need for insurance (term)?
- Is term insurance convertible to permanent insurance later?
- Are there health concerns?
- What is the rating of the insurance company?
- What is the cost?
Are there any new or innovative products that have been introduced to the market recently?
An innovative product in the life insurance industry is a hybrid insurance policy that provides coverage for either life insurance or long-term care needs. Your family may no longer need life insurance as the years go by, but seven out of 10 Americans 65 and older will need long-term care at some point in their lives, while one in five people will need it for more than five years, according to the US Department of Health and Human Services. At-home care or long-term residential care can rapidly deplete a family’s resources. A hybrid insurance policy is often a product that individuals and couples in their 50s and 60s consider as a way to have some protection for their estate assets. A hybrid insurance policy allows for flexibility and helps keep costs of care from negatively impacting an estate or a legacy to heirs.
What trends have you noticed in the industry that will shape choices or policies available to families?
A more recent trend allows you to insure a couple under one policy versus having separate policies for each. While not available in all states or with all companies, this trend seems to recognize that insurance costs are often a barrier for families, regardless of the critical need. Allowing two individuals to be covered under one policy should help reduce out-of-pocket costs and hopefully make purchasing insurance a viable option for more families.
This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.
