Life insurance is one of the best ways to financially protect your family if the unexpected happens. But most families don’t have enough protection in place.
A recent Policygenius survey revealed 63.5% of parents don’t have a private life insurance policy.
“Children are financially and emotionally dependent on their parents,” said Kieran Duffy, senior insurance adviser at Policygenius. “If God forbid one of the parents were to pass away, the children would be left in a less-than-favorable situation.”
Not only does life insurance financially protect your partner if tragedy occurs, it can also financially protect your children. It’s important for both spouses to get life insurance to completely cover their assets.
Parents with life insurance may have more peace of mind that their child will be financially set when they die. In the same survey, only 51% of parents who have private life insurance said they had felt financially prepared to have a child. Meanwhile, 71% of parents who have private life insurance said they felt financially prepared to have a child.
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Why workplace life insurance is not enough
While a majority of American adults have life insurance, almost one-third have only group coverage through their employer. While this is a great workplace benefit, this type of life insurance is typically not enough, said Duffy.
The payout is often not be enough to cover your family. Also, if you switch jobs to an employer without life insurance, you lose your coverage. Private life insurance can ensure your family is protected regardless of whether you change jobs.
How to find the right life insurance policy
Insurance may not always be the first thing on your mind when raising kids, but it’s important to financially prepare for the future.
There are a couple of questions to ask while shopping:
Term or whole life?
Most shoppers begin by asking what kind of insurance they should buy. While whole life insurance lasts your entire life, it is typically more complicated and expensive than term life insurance.
Term life insurance, which pays out a tax-free lump sum if you die during a certain period of time, is an inexpensive way to protect your family’s financial future. Most experts recommend it over whole life, outside of special circumstances.
How much insurance do I need?
There’s no perfect way to determine how much coverage you need. We have a life insurance calculator to give you an accurate estimate.
If you already have life insurance, revisit your policy to ensure you have enough coverage for you and your family, especially after a life change, like another baby.
“There is no reason to wait. Getting on top of this early is a smart play, as life insurance gets more expensive every year that you wait,” said Duffy.
Want to learn more about life insurance for your family? Check out our family financial planning page.