How many people do you know that own family life insurance policies? If you do not have one, you are certainly not alone. These types of plans can be very confusing, as there are a great many different options to consider. You might wonder why someone would take out a policy for you when they could just as easily purchase one for their family. It might be helpful to read through some of the tips below before you decide on what kind of coverage to purchase.
Most people buy family life insurance policies because they provide coverage for their children or other family members. You can often save money this way, particularly if you buy a joint policy for yourself and another family member, but this generally is only available as long-term coverage. For younger children’s life insurance coverage, the age of the child usually determines whether they are eligible for a term life or whole life policy. Often, the older children will be able to stay on a term policy until they reach a certain age.
Another reason that these policies are purchased is often to provide additional protection for the surviving family members after you die. If you have a mortgage or a loan on your home, you may find that the proceeds will cover the outstanding debt immediately. This type of coverage can be very important if you are a homeowner and live in a high-risk area. The mortgage lender or company may even require you to take out a policy in your name to provide additional protection. For the most part, a child life insurance policy rider will add considerable value to your overall policy and should be considered if at all possible.
If you are married, it is quite common for the surviving spouse to take out a life insurance policy of their own to cover the remaining debts. This is not always necessary, and the surviving spouse may prefer to just purchase an additional insured rider to replace their current policy. It is possible for a spouse to remain covered under a term policy and then purchase an additional insured rider so that both spouses’ families are protected in the event of their death. In some cases, if one spouse has passed away, his or her dependents may be able to stay covered under the policy. This additional insured rider would be designed to provide a lump sum payment to the spouse and his or her dependents if the spouse was still alive.
Another way to protect your family financially after you pass away is to purchase both a joint life insurance policy and a separate secondary life insurance policy. Typically, this coverage is purchased for a set premium amount that remains consistent throughout your marriage. Once the marriage ends, the former spouse simply stops paying the premiums. The separate policy is designed to provide financial protection to the family for a specified period after your death. For example, if your surviving spouse is in college and no longer able to earn an income, they would be able to continue coverage under the separate coverage until they become eligible for Medicare.
Many people who are younger than they should be on their insurance policies are put on a waiting period before they are offered full coverage. The reason for this is that many insurers do not want to take a chance on an older senior citizen who may not have as much experience and may not be as financially secure as they could be. The waiting period can often run into ten years, although it may vary depending upon the insurance company and the State you reside in. If you are concerned about the financial security of your family, it may be a good idea to purchase coverage immediately, even if the wait period has been placed on your coverage.
There are also various types of riders that can be added to your family life or permanent life insurance policy. These riders are typically designed to provide additional protection to the family or loved ones once the policy holder has passed away. Some of these riders include provisions that will cover funeral expenses, payment of mortgage payments, or payment of some credit cards that the policyholder used.
A few riders that you may consider to provide extra protection include a child rider and a non-contingent or spousal life insurance rider. A child rider is designed to cover the cost of the funeral and other related costs once your child has passed away. A non-contingent or spousal life insurance rider is designed to provide coverage in the event of the death of both parents while the couple is still married. The last type of rider to consider is the universal coverage rider which will provide coverage to your entire family in the event of the death of one or both parents. This type of policy can be useful in situations where the insured party does not remarry and his or her spouse still receives fair market value for life insurance when they die.