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If your income provides a large amount of financial support for your family, your partner may struggle to support themselves and your children in the event of your passing. A life insurance policy can help fix this, offering a significant financial safety net if the worst happens. Life insurance can also be necessary for stay-at-home parents, providing a payout that the surviving parent can use to help pay for childcare and other services to maintain the home. This article will explain how life insurance for families works, including costs, types, and tips on getting a policy.
How does life insurance for families work?
Life insurance for families allows the parent who gets the policy to provide financial support for their partner and children if they pass away during the policy term. If this happens, the policy pays out a death benefit the surviving parent can use to help replace the policyholder’s income, pay off outstanding debts, and save and invest to meet financial goals.
How much does family life insurance cost?
Here are the average costs for 20-year, $500,000 term life insurance policies for healthy, non-smoking men and women:1
| Men | Women | |
|---|---|---|
| 30 | $250 | $207 |
| 40 | $365 | $309 |
| 50 | $882 | $678 |
The average costs for a $250,000 whole life insurance policy for healthy, non-smoking men and women are highlighted below:1
| Men | Women | |
|---|---|---|
| 30 | $2,218 | $2,003 |
| 40 | $3,318 | $3,090 |
| 50 | $5,125 | $4,880 |
Here are the average costs of a $250,000 universal life insurance policy for healthy, non-smoking men and women:1
| Men | Women | |
|---|---|---|
| 30 | $1,371 | $1,225 |
| 40 | $1,846 | $1,755 |
| 50 | $2,528 | $2,284 |
Remember that age, health status, and death benefit size can impact your premiums.
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Types of life insurance for families
Here are some life insurance policy types for families to consider:
Term life insurance
Term life insurance is a type of policy available at Aflac that lets you choose a policy term of 10, 20, or 30 years, depending on your needs. If you pass away during the policy term, your beneficiaries can receive the death benefit. Once the policy expires, you must renew coverage or get a new policy to stay covered. However, policy premiums are reasonable for the amount of coverage available. Therefore, this policy may be ideal if you don’t need coverage forever. For example, you may only need coverage until your kids become adults.
Whole life insurance
Whole life insurance is a permanent policy Aflac offers that provides lifelong coverage as long as you keep up with premiums. Some of your premiums go into a cash value growth component that grows tax-deferred at fixed interest. When the cash value grows large enough, you can borrow from it at low rates with no fixed repayment date or withdraw from it. If you surrender the policy, you can receive the cash value minus surrender charges.
Whole life insurance may work best if you want coverage to help financially protect your partner and children for their entire lives. However, keep in mind that this policy can come with higher premiums than other types of life insurance.
Final expense insurance
Final expense insurance is a small whole life policy for end-of-life expenses such as medical bills and funeral costs. It comes with a small death benefit, low premiums, and a cash value component that grows over time.
Credit life insurance
Credit life insurance can help your cosigner or loved ones pay off an outstanding debt if you pass away during the policy term. Some lenders for mortgages and auto loans may offer this coverage. These can be helpful when a loved one has cosigned a debt with you and may need help repaying it if you pass away.2
Universal life insurance
Like whole life insurance, universal life insurance offers lifelong coverage and cash value. However, you can adjust the death benefit during the policy term if you contact your insurer. You can reduce your premiums in exchange for a lower death benefit, or raise your death benefit by increasing premiums.
Why should families get life insurance?
Here are a few reasons to consider family life insurance:
Provide financial security for your surviving partner
If you work full-time, your family may lose a substantial income stream in the event of your passing. Even if your partner works, it can be much harder for them to support themselves and your children since they must maintain similar living expenses. A life insurance death benefit can effectively help replace your income, allowing them to continue covering necessary expenses and saving those funds for the future.
Help cover childcare costs and household expenses
Stay-at-home parents provide invaluable contributions to the household, including childcare, household management, and various other responsibilities. If you’re a stay-at-home parent and passed away unexpectedly, the financial burden on the surviving partner could be overwhelming. Life insurance can provide essential financial protection to help cover necessary expenses in your absence.
Pay off a mortgage
Mortgages are often the most significant expenses people have. If you pass away, it may be challenging for your partner to cover the payments. A life insurance policy can provide them with enough funds to help pay off the entire mortgage at once to maximize equity, or set aside money to continue making monthly mortgage payments. Regardless, this can significantly help reduce their financial burden.
Can help cover children’s college expenses
In-state tuition at public four-year universities costs an average of almost $11,000 annually.3 Out-of-state tuition, along with private colleges and universities, can cost much more, even with financial aid. Life insurance can help cover these costs if you pass away so your children can receive an education. Additionally, if you get a policy with cash value, you can access these funds while you’re alive to pay for education expenses. You can withdraw or borrow from it for tuition, fees, and more.
Tips for getting a family life insurance policy
Here are some tips for getting a family life insurance policy:
- Think about coverage needs and length: Consider your income and living expenses when determining how much coverage you need. Additionally, decide whether you need coverage only while your kids are minors or if you’d like to cover them for your entire life.
- Compare quotes: Shop for quotes with multiple insurers to compare rates and find the most coverage for your budget.
- Consider your financial picture: If you have more complex financial needs, you may opt for a policy with cash value. Otherwise, you could consider a term life insurance policy.
- Look at future goals: Consider your and your partner’s goals, such as retirement and paying for your children’s college education.
- Estimate living cost changes: Will your family’s living costs increase as your children grow? Will they decrease when your children move out? What will inflation look like? These factors can impact the level of coverage you may need.
Get family life insurance from Aflac
Life insurance can offer families significant peace of mind, as you’ll know that if the worst happens, your loved ones can continue supporting themselves by helping replace your income and saving extra funds.
However, there are many types of policies to consider. Term life insurance offers lower costs for maximum coverage, whereas whole and universal life insurance can be more costly for lifelong coverage and wealth-building potential. Meanwhile, final expense and credit life insurance are smaller policies designed for specific purposes.
Aflac offers term and whole life insurance at various coverage levels to get your family the coverage you need. Chat with an agent today to explore your options and get a quote.
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Disclaimer
1Forbes - Average Cost Of Life Insurance In March 2024. Updated February 21, 2024. https://www.forbes.com/advisor/life-insurance/how-much-is-life-insurance/. Accessed March 13, 2024.
2Investopedia - Credit Life Insurance: What it is and Who Needs it. Updated July 23, 2023. https://www.investopedia.com/terms/c/credit_life_insurance.asp. Accessed March 13, 2024.
3Bankrate - Average cost of college. Published November 1, 2023. https://www.bankrate.com/loans/student-loans/average-cost-of-college/. Accessed March 13, 2024.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac Coverage
Life (A68000 Series) - In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term and Whole Life (B60000 Series) - In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400.
Group Whole Life (Q60000 Series) - In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX. Group Term Life (Q60000 Series) - In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M, ICC18Q60300C, ICC18Q60400C.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
Tier One Coverage
Life (Final Expense Life) - In Arkansas, Delaware, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Tier One coverage is underwritten by Tier One Insurance Company. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
Aflac’s family of insurers include Aflac, Aflac New York, Continental American Insurance Company, and Tier One Insurance Company.
Aflac WWHQ | Tier One Insurance Company | 1932 Wynnton Road | Columbus, GA 31999.
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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