What is family life insurance?
Family life insurance can best be described as a “combo” policy. The primary policyholder has permanent or temporary coverage while their spouse and children are covered by term life insurance. Here is how it works:
With a family life insurance policy, the primary policyholder is covered by a whole life insurance policy or a term life insurance policy. As the name suggests, whole life insurance is designed to last the life of the policy holder. It is the most common type of permanent life insurance policy sold today. And like some other types of permanent life insurance, a whole life insurance policy offers a savings component from which the insured can borrow. Term life insurance provides coverage for a specific number of years (usually between 10 and 30).
A family life insurance policy also includes a term life insurance rider for the spouse of the primary policyholder. If the spouse dies during this period, beneficiaries will receive their death benefits.
Finally, a family life insurance policy covers children with a term life insurance policy. This is important for several reasons. If a child dies, the family has the funds to bury the child. The life insurance policy also stays with the children when they leave home. Suppose a family purchases family life insurance when their children are young. If they opt for a 30-year term life insurance policy for children, these children will carry coverage until their 30s. Also, if the policy they buy is convertible, that means the children can convert it to permanent life insurance.
How much does family life insurance cost?
The cost of family life insurance is based on various factors, such as age, number of family members, death benefit, and length of coverage. State Farm provides this example of how much a family life insurance policy would cost a family of three. It assumes that each parent has a term life insurance policy with coverage of $ 250,000 and that the child is covered by a term life rider of $ 10,000.