Let’s be honest, sometimes thinking about the positives might be the only way to keep your sanity. However, there’s one thought you shouldn’t ignore: What would your family do if you were gone?
Out of sight, out of mind, right? Unfortunately, that’s not the way life (or life insurance) works.
The truth is, it’s important to consider what your family might do without you and what you can do now to protect your family’s future. Read on to learn how to pick the right life insurance policy for parents.
What Exactly Is Life Insurance, Anyway?
Life insurance is an agreement between you and an insurance company that, in exchange for monthly payments now, can help provide some financial security and peace of mind for your loved ones’ futures. Your coverage amount, also referred to as a death benefit, could help your beneficiaries manage things like medical bills, debt, funeral costs, or even creating a college fund.
Considering your options is a vital part of family planning. A life insurance policycould help prepare your family for the unexpected and help protect your kids’ futures. As a parent, here’s what you need to know about life insurance.
Do Parents Need Life Insurance?
Whether you are a 9-5, stay-at-home, or choose-your-own-adventure caregiver, life insurance is for parents of all stripes. Basically, if you’ve got people to financially protect, life insurance could benefit your family.
Sure, your kids could use some help covering funeral costs, but life insurance can do so much more .
Let’s say you’re currently employed with a basic life insurance policy through your job. That typically ranges from $25,000 to $100,000 (roughly equal to your annual salary). That’s a good start, but it might not be enough to cover your family’s needs. And this type of term life policy means you’ll likely lose that coverage if you ever change jobs.
Or let’s say you’re a stay-at-home parent. Do you need life insurance? Well, think of it this way: how much might it cost to replace all the value you provide? From cooking, cleaning, nursing, teaching, bookkeeping, chauffeuring, and more, studies have shown that if parents earned a salary, they’d make $184,820 a year. If only, right?
No matter your parenting situation, your partner or kids would irrefutably feel the financial effects of your loss, and a life insurance policy can help offer them some protection.
What Can A Life Insurance Payout Cover?
A life insurance death benefit is paid directly to your chosen (usually tax-free). There are no limits to what it can cover, but here are some things parents might consider when determining the they’ll need to support their financial obligations if they die unexpectedly.
Your loved ones can use your life insurance payout for:
Loss of income
Do your loved ones depend on two incomes? Or maybe one parent works full time and the other part time. The sudden absence of an income can be a huge financial expense for your family.
A life insurance policy can help protect your family’s insurable interest and maintain your family’s current lifestyle, even on one income. And if you’re a single parent and are the only source of income in your household, life insurance could potentially replace your annual salary for years to come.
The average cost of childcare in the US is $11,666 per year. With only one parent, your kids might need more hours of childcare (whether it’s daycare, after-school care, or even a nanny) to help your spouse maintain a full-time job.
This is especially important if your spouse doesn’t have a flexible work schedule.
There’s no shame in having help. Life happens, and household chores are time consuming. If hiring a housekeeper means that your spouse can spend more quality time with the kiddos and less time doing laundry, dishes, and dusting those ceiling fans, it could be worth considering.
Do your kids participate in organized sports? Maybe they take music lessons. Any way you slice it, the cost of participating in extracurricular activities is a final expense thatcan add up, and it’s not likely to get cheaper over time.
Medical bills, car repair costs, house maintenance – it’s important to have coverage in preparation for rainy days. A death benefit can be put into a savings account, which can help turn a financial emergency into a minor inconvenience, reducing or completely eliminating stress for those special needs. And who doesn’t want that for their family?
Can You Buy Life Insurance For Your Aging Parents?
Caring for and losing an elderly parent not only impacts your life emotionally, but also financially. You may need to take time off work to provide long-term care, pay for senior-living expenses, cover medical bills, or pay off your parents’ unresolved financial obligations. Life insurance can help ease the financial burden left behind when a loved one passes away.
The process of buying a policy on a parent starts with a conversation. You need to know:
- What are your parents’ expenses?
- Is anyone currently relying on them financially?
- What are their other financial obligations (mortgage, debt, assets)?
- What do they want to leave behind for their family?
If you have 1) their consent and 2) proof of insurable interest (or proof that without life insurance, your family would experience financial difficulty), you can consider buying an insurance policy.
You can determine the amount of coverage they need by evaluating their financial obligations. Once the policy is in place, your parents (or you) would pay monthly premiums that help protect your family once they pass away.
What Is the Best Life Insurance Policy If You’re A Parent?
Whether you are buying life insurance for yourself or for a parent, you need to find a policy that best supports your family’s financial situation.
Here are four types of life insurance parents may want to consider:
- Term life insurance: typically more affordable policies with a 10-30 year expiration date.
- Universal life insurance: permanent policies with higher monthly rates, generally speaking
- Final expense life insurance: lower coverage amount providing burial insurance for funeral expenses
- Guaranteed issue life insurance: higher cost policies for those with health issues
Life Insurance For Single Parents
You work hard to protect your home and family. That protection doesn’t have to stop when you pass away.
In two-parent households, the surviving parent may be able to financially provide for the family if one parent dies unexpectedly. In one-parent households, there may be no other family member who can step up. Life insurance can help provide for your children’s financial future, no matter the situation.
When considering your options, look for life insurance coverage that will pay out the right amount of money to meet the entirety of your children’s financial needs.
What Determines Life Insurance Rates?
There are many factors that determine life insurance rates. Premiums may depend on:
- Your age and health
- The type of policy
- The amount of coverage needed
Your premiums can also be impacted by terminal illness, lifestyle, or habits.
The younger and healthier you are, the better your rate may be. This is why your premiums may likely be lower if you get life insurance today rather than putting it off until later.
Bestow: Fast, Affordable Life Insurance You Can Trust
After all, one of the most valuable commodities as a parent is time (there never seems to be enough of it). Good news, moms and dads: Bestow makes applying for affordable term life insurance super fast and easy.
Our data and technology-driven approach removes some of the traditional steps of buying term life insurance. It’s as simple as filling out a form online. No medical exams, no waiting for test results, no salespeople working on commission (though we do have uncommissioned agents available to talk if you like).
Get your life insurance quote from Bestow now. Apply in minutes. Rates with Bestow start at just $11/ month (that’s less than most TV/movie streaming services).