Best Life Insurance for Young Parents

How to Find the Best Life Insurance for Young Parents

Now that you have a family one of the most important decisions you can make is purchasing life insurance to guarantee your young family is taken care of in case you are no longer there to provide for them.

Life insurance can do just that. Life insurance provides guaranteed protection and financial security to help your family go on without your income.

The proceeds from life insurance can be used for any purpose, including to replace your income, pay the mortgage, pay off credit card debt, provide for your child’s education, your spouse’s retirement, and to allow your family to continue the lifestyle they enjoyed with you.

You can request free life insurance quotes now to find the most affordable life insurance protection for your loved ones.

Life insurance is probably the most important purchase you will make to guarantee the financial security of your family’s future. So, it’s very important to understand how it works and what your options are when it comes to selecting a policy.

 

Learn About Life Insurance – How It Works

Life insurance pays out money to a beneficiary (your spouse for example) when the person insured by the policy passes away. The payout on a policy is called the death benefit. You select and list the beneficiary on the policy when your buy your insurance. 

Example of Life Insurance:  You purchase a $500,000 policy insuring your life and naming your spouse as beneficiary of your policy.

If you die while your insurance is "In Effect", your spouse (beneficiary) receives the $500,000 death benefit payout form your policy, usually free from federal income tax.

The proceeds from your policy may be used to support your family after your passing, such as paying off the mortgage, paying for living expenses, maintaining their lifestyle and funding your child’s college education.

 

Compare Types of Life Insurance

Term versus Permanent Insurance

There are two basic types of life insurance policies available: Term and Permanent.

Term Life is Temporary Protection

Term life is the most affordable type of life insurance policy available. Which means you can buy a lot of protection for your loved ones for a low amount of money.

With term coverage you buy a policy to cover a specific period of time, usually for a duration of either 10, 15, 20 or 30 years. If you pass away during the "term" of your plan, the policy pays out a death benefit to your beneficiary (spouse).

The insurance provided by your policy stops at the end of your "term". The policy does not pay out if you are alive when the term expires.

Permanent Life is Guaranteed Lifetime Protection

Permanent coverage lasts for your entire lifetime, no matter when you die.

There are several types of permanent plans including whole life, universal life, variable life and indexed universal life insurance.

These plans include an investment feature referred to as "cash value". The cash account in permanent policies grow over time, tax deferred. Policyholders may be able to take a loan if needed in the future.

You may have the option to surrender the policy and receive the cash value, less any surrender fee. Surrendering your policy ends your life insurance coverage.

Any existing loans against your permanent life insurance policy will decrease the amount of the payout to the beneficiary at time of death of the insured.

 

Which Type of Life Insurance Is Best for You?

Buy Term Life Insurance for These Reasons:

• You want a simple, easy-to-understand policy
• You want the most affordable coverage
• You need coverage for a fixed number of years
• You want to cover the years of raising a family and paying a mortgage

Buy Permanent Life Insurance for These Reasons:

• You need lifetime coverage to support a child with special needs
• You want to leave a legacy no matter when you pass away
• You want insurance and an investment
• You have a large estate subject to estate taxes upon your passing

 

The most popular type of life insurance for a family is Term Life because it’s cheap, easy-to-understand, and flexible to meet your specific needs for a period of 30 years or less.

Since rates are so low, it’s easy to create a sizable safety net on a budget. 

Purchase term insurance for the years you are raising your children, you are growing your savings and paying off your home mortgage.

The goal being, when your term policy expires you would no longer need life insurance as the kids would be grown up and on their own, and the mortgage would be paid off.

And, you would have enough saved for your spouse to retire comfortably.

Permanent life insurance is a good option if you have a dependent who will rely on you for financial support for the rest of your life.

In addition, if you have a large estate, your heirs could use the money form your policy to help pay any state or federal estate taxes owed upon your death.

Also, if you feel you would need permanent insurance but you can’t afford it right now, term life insurance usually offers an option to convert your policy into permanent insurance by a specific date in the future.

 

Why Both Parents May Need Life Insurance 

It’s not just the main breadwinner who needs life insurance, it may be both parents.

Whether your spouse works or is a stay-at-home parent, both you and your husband/wife may need protection.

Just imagine all of the work your spouse does for your family on a day-to-day basis. There’s cooking the meals, grocery shopping, cleaning the home and running errands. And the cost to replace the child care services provided by a stay-at-home parent may cost hundreds of dollars per week by itself.

The payout from a life insurance policy could help the surviving spouse take a few years off from working to raise the children.

 

How Much Life Insurance to Buy

To figure out how much coverage your family would need without you consider how much is spent each month for living expenses, and consider how much is needed for the future of your family.

Here are Four Important Considerations:

• How many years of income should your life insurance policy replace and multiply your annual income by that number. For example, 5 X $75,000 = $385,000.
• Add any other financial obligations; such as, debts (auto, personal, credit cards) and college education for your children.
• Include the cost of services you provide that would have to be paid for to replace upon your death. 
• Then subtract your total savings and any existing life insurance coverage you own.

You can use a life insurance needs calculator that will ask you specific questions and use your answers to accurately determine how much coverage you need to adequately protect your family.

 

Naming Beneficiaries of Your Policy

When you purchase a life insurance policy you name a beneficiary (or beneficiaries) to receive the death benefit proceeds from your policy upon your passing.

However, don’t name a minor child to be beneficiary. If the beneficiary is a minor, the life insurance company can’t pay the death benefit until the court appoints a guardian.

An option would be to set up a life insurance trust to hold the money and property for your children and name the trust as the beneficiary.

You appoint a trustee, such as your spouse or another adult, to manage the trust according to your instructions.

An attorney can help you set up the trust, and the life insurance company can tell you how to word the beneficiary designation.

 

How Life Insurance Is Priced

The annual price you pay for coverage depends on the type of life insurance policy and the amount of coverage provided by your policy. If it’s a term policy, the length of term will affect the price.

 

What Factors Affect Your Cost of Life Insurance?

Other factors which may impact your cost of insurance, referred to as risk factors, include the following:

• Age – The younger you are the lower your price for coverage.
• Gender – The healthier you are the lower your cost of coverage.
• Tobacco Use – Smokers pay up to 2-3 times more than non-smokers.
• Lifestyle – People with a history of drug or alcohol abuse pay more.
• Health – Healthier people pay less.
• Occupation – People with high risk jobs like fire fighters pay more.
• Hobbies – People with high risk hobbies like mountain climbing pay more.
• Driving Record – People with poor driving records pay more.
• Weight – Obese people pay more than those who are not overweight.

 

How Can You Save Money? 

Prices for life insurance vary by insurance company. You can comparison shop for term life insurance online.

With a life insurance policy you’ll have peace of mind knowing your family’s future financial security will be guaranteed should you pass away unexpectedly.

 

Tips for Saving on Your Policy 

• Compare Multiple Price Quotes
• Choose Annual Premium Payment Option
• Buy Coverage Now
• Quit Smoking
• Get Healthy
• Lose Weight

 

Questions & Answers About Life Insurance for Young Parents

 

How Long Do You Need Life Insurance?

That depends on what your goal is for your policy. Do you want life insurance long enough until your kids are on their own and the home mortgage is paid off? If so, you may want to consider a 20 or 30 year term life insurance policy. 

 

What is the Best Type of Life Insurance for Young Parents?

If you need lifetime coverage permanent life insurance can provide the protection you need. But, it costs a lot more than term life insurance which provides protection for 10, 15, 20 or 30 years.

Many young families want the most life insurance at the lowest price while their family is growing, and a 30 year term life insurance policy can guarantee you low rates for the entire 30 years of your policy.

 

How Much Life Insurance Do We Need?

This is one of the most important questions to answer about your life insurance needs. To get an accurate estimate of your true life insurance needs, we recommend you use a life insurance needs calculator to give you an instant estimate of how much life insurance you and your family need.

 

What are the Top Life Insurance Companies?

There are many highly-rated life insurance carriers in America, and literally hundreds to choose from when comparing plans.

Among the leading life insurance companies in America offering term life insurance are Metlife, Nationwide, Allstate, New York Life, Liberty Mutual and Prudential.

However, some of the life insurers offering the most competitive rates for term life insurance are Banner Life, ING and Transamerica.

 

Can You Buy Life insurance Online?

If you qualify, you may be able to purchase a life insurance policy for you and your spouse online.

Some life insurance quote providers like JRC Insurance Group have a network of highly-rated life insurance carriers from which you can compare the lowest rates in less than 2 minutes. 

And, they have helpful licensed life insurance representatives to assist you in answering all of your questions about buying life insurance. You can speak to them online at their toll-free number or communicate with them about your questions by email.

 

Do You Have to Take a Physical Exam?

No, you may not have to take a physical exam in order to purchase your life insurance coverage online.

In fact, if you are healthy and age 65 or under you may qualify to buy up to $1,000,000 of term life insurance online without any health exam.

That’s right, no doctor exam, no blood tests, no urine tests, and no needles.

 

Life Insurance Quotes

 

Top Pick – JRC Insurance Group

JRC Insurance Group helps you shop, compare and save on life insurance. Regardless of your age or health background, we'll shop our 40+ insurance companies and find you affordable life insurance you need to protect your family and fit your budget. Compare the best life insurance rates for savings up to 73%. Get Your FREE Quote

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Life Insurance for Young Parents