By: Tiana Cuevas from Consumers Advocate
If you’re a parent, and you haven’t purchased life insurance yet, the thought might have been hovering in the back of your mind for a while. So…what’s stopping you?
Maybe death is a subject that’s too scary to think about. Or you think your health history might prevent you from getting a policy at an affordable price. Or, like many, you’re confused about which policy to choose and for how much.
However, as this guide to the best life insurance for families shows, it’s just not as complicated or scary as many tend to think.
Simply put: while there is a wide variety of policies available, most parents would do best with term life insurance, which is inexpensive and covers the years when your children would most need your financial support. For example, for parents of very young children, a 20-year term life policy—one of the most affordable options—would be active all those years from childhood into college.
On the other hand, parents of kids who will need financial support for their entire life, like special needs children, will find that a whole life policy would keep them covered regardless of age. Although more expensive, that policy will remain active as long as the premium is being paid, without an expiration date.
Thinking about your family’s debt
Making the decision to buy life insurance accomplishes a lot more than just having X amount of money set aside in case the unthinkable happens. While nothing can replace the loss of a parent, having financial support can at least help children have a sense of stability by letting them stay in the same home and school that they’re used to, surrounded by friends and teachers who know them and can support them. Having a strong financial net also prevents a surviving spouse from having to seek additional income (which sometimes means a second job) all the while they’re still trying to grieve.
But there are other benefits to buying life insurance. Among them: modeling great financial behavior for your kids.
As it turns out, both money and debt are inheritable in more ways than one. Studies show that children will tend to model their parents’ financial habits—whether that’s the tendency to save for the future or the tendency to fall into debt. While some of this has to do with children’s personalities, much of it is learned from what they see their parents do, and how they see them approach money.
First, in practical terms—if you are in debt now and you’re ready to buy life insurance, it’s essential to keep that in mind when choosing coverage. You want to choose enough coverage to help your children pay for any debts and bills that they will be responsible for, including mortgages and household-related expenses.
But, just as importantly, purchasing life insurance can be a big part of a smart financial strategy, and in teaching your kids that, when it comes to finances, it’s best to think ahead rather than just reacting to emergencies as they happen.