New parents start a rollercoaster of life lessons when they bring their new baby home. You begin planning for your new future while juggling regular feedings and diaper changes. When you have a free moment, you might wonder what type of life insurance parents should consider so your baby’s protected if you or your partner passes away.
This guide explains the many types of insurance that often confuse new parents. They have different benefits that might work with your lifestyle, so compare each plan to find the best insurance for your family.
1. Term Life Insurance
Term insurance is temporary and more affordable than most plans. Depending on which company provides a quote, you could purchase a plan that lasts 10, 20 or 30 years. Adjust your plan when your financial situation changes due to life circumstances or promotions. What you agree to pay for now may not be enough for your family later on.
Your insurance should be large enough to cover your family’s expenses in case of your death. Term coverage is one of the most popular options because it’s so easy to personalize and match with your ever-evolving budget.
2. Universal Life Insurance
People pick universal insurance policies when they want something with a cash value that’s easily adjusted. You can even use the cash value to pay the premiums and bypass monthly out-of-pocket payments. The only thing that holds some people back from this insurance is that it earns interest at the market rate, so you could lose value if the market has a rough time.
3. Whole Life Insurance
Whole life insurance is one of the most popular plans. The provider divides the plan into two parts: a savings account and a death benefit. Use the savings to pay for the plan while it gains value annually. Paying the premiums ensures continued coverage for this permanent plan. People who don’t think their family will grow and don’t expect major changes to their lifestyle will benefit from this plan’s long-term coverage and flexible payment methods.
4. Variable Life Insurance
Interested in using the market to maximize investments? Variable life insurance might be your best option. Each payment goes into sub-accounts based on real-time stocks. You’ll manage the accounts as the market fluctuates along with worldwide events and economic booms. Depending on how attentive you are with the accounts, you could multiply your investments.
5. Indexed Universal Life Insurance
Premiums for indexed universal life insurance invest your money into the stock market, but you won’t lose money when the index plummets. Your plan will have a guarantee that insures it against losses, although they cap maximum returns. It’s a guaranteed way to provide for your family no matter when you die, without signing onto a fixed interest rate.
6. Variable Universal Life Insurance
Look into variable universal policies if you want to invest your premium payments without locking yourself into a permanent plan. Variable plans are easier to work with because they’re adjustable. Your death benefit and monthly premiums won’t stay the same forever. Adjust them as needed if your family grows or needs more annual income to cover the bills.
7. Group Life Insurance
Also known as group term life insurance, this type of coverage comes from an employer. Not all employers offer it, so you’ll have to contact your human resources representative to inquire about what’s available through your job.
Some people don’t even have to purchase group life insurance. Instead, it comes as an included benefit in what your employer covers. Dive into the details to see how expansive it is. Group plans range from small, individual plans to family plans. You could have to get life insurance elsewhere if your employer’s plan is insufficient for your needs.
8. Final Expense Insurance
If you’ve read through this list and still haven’t found anything that piqued interest, consider final expense insurance. It’s coverage that pays for everything related to your passing. Your loved ones won’t need to worry about your medical care, funeral costs or your preferred type of burial.
This insurance is mostly popular with older individuals who lack other forms of life insurance. Their policy may have expired or ended with their employment at retirement. The premiums for final expense insurance may be slightly higher than other types, but it’s more affordable than requiring your kids to pay for your end-of-life expenses out of pocket.
Curious consumers should note that this coverage does not pay your loved ones in the case of your death. They won’t receive a monthly or biannual supplemental income, which may change how you view your search for the best plan.
Types of Life Insurance Parents Should Consider
There are many types of life insurance parents should consider, especially if their kids are too young to provide for themselves independently. Provide for your loved ones after you die by selecting the best coverage for your lifestyle. Whether you prefer shorter terms, permanent coverage or market-value interest rates, there are plenty of options to consider before making anything official.