Family life insurance

A family life insurance plan provides you and your loved ones with much needed financial security. Here’s how to choose the right coverage for your whole family.

Nupur GambhirAmanda Shih author photo

By

Nupur Gambhir

Nupur Gambhir

Life Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius and licensed Life, Health, and Disability agent in New York.

&

Amanda Shih

Amanda Shih

Editor & Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Updated March 30, 2021|5 min read

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Purchasing a life insurance policy for yourself is always a good idea; it ensures that your family members won’t suffer financially in the event of your death. Unfortunately, to be fully prepared for a death in the family, insuring just yourself might not be enough. 

If you’re married, have kids, or depend on your parents for money, you may need to consider their life insurance coverage as well.

Key Takeaways

  • Spouses can choose between purchasing two separate life insurance policies or one shared policy

  • Most children don’t need life insurance coverage

  • You can't buy policies for your parents unless you can prove their death would financially affect you

  • Family life insurance is sometimes advertised as one product, but coverage for your family usually requires multiple policies or riders

Who needs a family life insurance plan?

If the breadwinner in your family has life insurance coverage, you might think you’re set. However, any family member who provides for your household should own life insurance to ensure you have financial support for:

  • Childcare 

  • Daily living expenses

  • End-of-life expenses

  • Future college expenses

  • Outstanding loans, like a mortgage

Even if you think a non-working spouse or a live-in parent doesn’t need coverage, consider whether they provide childcare or housekeeping you’d otherwise pay for. A life insurance payout can go toward covering those expenses.

Purchasing life insurance with your spouse

When buying life insurance with your spouse, you have the option to buy two individual life insurance policies or one joint policy. Most couples should buy separate policies, which provide better and more affordable protection for your dependents.

Joint life insurance policies are best for families if one spouse doesn’t qualify for an individual policy or the life insurance payout is meant to cover estate or inheritance taxes. 

Buying separate life insurance policies

If you opt to purchase individual life insurance policies for you and your spouse, each person will need to go through the application process separately. Your premiums might differ from the premiums that your spouse receives, depending on your respective health histories. 

You may be able to work with an insurance agent to navigate the application process as a familial unit. You can also take the medical exam at the same time.

The two most common types of individual life insurance policies are term insurance and whole life, a type of permanent life insurance. Term life insurance lasts for 10-30 years and expires, whereas whole life insurance lasts until you die and comes with a savings-like cash value component.

Most people should buy term life insurance, which is five to 15 times cheaper than whole life and easier to manage. 

→ Learn more about term life insurance

Buying a joint life insurance policy

A joint life insurance policy may seem simpler because you can share one life insurance policy with your partner. However, most joint policies are costly permanent life insurance policies and are only recommended in specific circumstances.

There are two types of joint policies: 

  • First-to-die life insurance: Pays the death benefit after the first spouse dies, and is an option if one spouse can’t qualify for affordable individual coverage. 

  • Second-to-die (survivorship) life insurance: Pays the death benefit after the second spouse dies. Second-to-die is most useful for inheritance planning.

Combining your coverage in one joint policy means that if one spouse is less healthy than the other, you’ll pay more for the joint policy than you would as individuals. In the event of a divorce, joint policies can also complicate proceedings.

→ Learn more about the pros and cons of joint life insurance

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Life insurance for children

Life insurance companies usually offer two options for child life insurance coverage:

  • Child riders: These additions to your policy are relatively cheap—often around $5 per year for every $1,000 of coverage—and one rider covers all of your children. That means you could pay as little as $4.17 a month for $10,000 of coverage. 

  • Child life insurance policies: This is whole life insurance for children and is often marketed as a way to invest for your child’s future. Policies are expensive and aren’t the best way to save for your child. 

Most parents should buy the cheaper child rider rather than a costly child life insurance policy. Many parents don't need coverage for their children at all. Unless your child is likely to develop a medical condition that would make buying a policy difficult as an adult, there’s little need for child life insurance.  

If you want a small amount of coverage that could cover funeral expenses in a worst-case scenario, a child rider is significantly more affordable. To save for your child’s future, traditional investments like a 529 plan are less complicated and earn more interest than whole life policies.

→ Learn more about buying life insurance for children

How much does a family life insurance plan cost?

If you wanted life insurance coverage for a family with two relatively healthy parents and one or more children, the total monthly cost could be as low as $76 (under $1,000 per year).

Sample family life insurance premiums: Two parents and two children

FAMILY MEMBER     COVERAGE                               MONTHLY PREMIUM 
35-year-old female20-year, $1,000,000 term life insurance$42.31          
35-year-old male  20-year, $500,000 term life insurance  $29.16          
Two children      $10,000 child rider                    $4.70           
                   Total monthly premiums             $76.17          

Methodology: Rates are calculated for 35-year-old male and female non-smokers in Ohio, who qualify for a Preferred rate class, obtaining a 20-year, $1,000,000 term policy with a $10,000 child rider and 20-year, $500,000 term life insurance policy. Life insurance averages are based on a composite of policies from 11 carriers that offer policies through the Policygenius marketplace. Individual rates will vary as specific circumstances will affect each customer's rate. Rate illustration valid as of 3/30/2021.

If you opt for permanent life insurance, a spousal rider, or joint life insurance, your quotes will look different. Any family life insurance plan involving permanent insurance will cost more, while a spousal rider on one spouse’s policy will save you some money but offer less coverage.

Speak with an independent insurance agent to find out which life insurance options are best for your family. 

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Purchasing a life insurance policy for your parents

It’s possible to buy life insurance for your own parents, but you’ll need their approval. Life insurance companies require that you prove your insurable interest in anyone you buy a policy for—i.e., whether you’d suffer financially due to their death. You’ll also need them to participate in the application process and medical exam and sign the policy. 

If your parents cosigned any of your loans or help with your childcare, that assistance may qualify you to buy a policy on their behalf. An alternative is to have your parents apply for their own coverage and name you as a beneficiary. You can then assist with paying their premiums. 

Burial insurance

Even if your parents don’t currently provide you with financial assistance, you can get coverage for their end-of-life expenses by purchasing final expense insurance. This type of permanent insurance can cover funeral costs and ease the financial burden of a parent’s death.

You’ll still need your parents to agree to apply and sign the policy, but final expense insurance applications require minimal medical information. It’s much easier—though more expensive—to buy for your parents than a traditional life insurance policy.

→ Learn more about buying life insurance for your parents

Life insurance protects your family from the costs of unexpected death—funeral costs, an unfinished mortgage, unpaid student loan debt, lost income, and future college savings. Choosing the right combination of life insurance policies and riders can provide affordable financial coverage for your family members.

Family life insurance FAQ:

What is a family life insurance policy?

Family life insurance refers to a combination of life insurance policies and riders that protect your whole family. Some insurers and brokers process these policies at the same time.

Do I need life insurance for every member of my family?

Any adult that contributes to your household should have life insurance, including a non-working spouse or your own parents. Children rarely need their own life insurance.

How much does it cost to get life insurance for a family?

A couple with a $1 million, 20-year term life insurance policy with a child rider and a $500,000, 20-year term policy could spend around $76 per month on life insurance. Costs vary depending on your profile and needs.

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