Dying prematurely and leaving young children without the means to face living expenses is every parent's worst nightmare. This is why it's important to buy the right life insurance, even if preparing for the worst seems somewhat morbid. Some things to take into consideration when buying life insurance for parents include calculating the amount needed, deciding on a suitable policy type, getting a range of quotes and making the insurance as affordable as possible.
Typical Life Insurance Amounts For Parents:
To calculate how much life insurance is required, mom and dad should take into account the standard of living the dependents have grown accustomed to. Consider how much income would be needed to maintain that standard of living.
It's also important to factor in debts such as mortgages and credits cards, as well as future expenses like college tuition and a first car. If necessary, use an online life insurance calculator to come up with an estimation of the amount needed.
There are 2 main types of life insurance policy. The first is term life insurance. This pays a benefit upon the death of a mother or father and is available for fixed time-periods such as 10, 20 or 30 years. Term life insurance is the cheapest type of life insurance for parents. The 2nd main type of insurance is permanent life insurance. Parents are given a 'cash value' account that is used to accumulate savings. Subtypes of permanent life insurance include whole life, universal life and variable universal life.
A mom or dad will be quoted life insurance rates that are based on the parent's life expectancy, the face amount requested and the length of the policy being quoted. Life expectancy in itself is dependent on both current and previous health conditions, which is why insurance companies often want to know as much as possible about the parent's medical history. Based on medical history, the individual being insured is assigned to an underwriting category. Common categories include 'substandard', 'standard', 'preferred' and 'preferred plus'.
Regardless of the policy and insurer chosen, there are ways of making life insurance for parents more affordable. For example, many people consciously decide to reduce either the benefit amount or term period to reach an affordable price for term life insurance. They then have the option of buying more insurance in the future, as and when they can afford to. Alternatively, if the mother or father needs insurance and the other spouse has group life insurance through work, it may be possible to buy group life for the parent in need at the next open enrollment period. Ask the employer if it offers this as an option and make a note of when the enrollment period starts.
Any mother or father wants to protect their children, even after they've gone. The only way to effectively provide a regular income for dependents posthumously is by getting the right life insurance. Therefore, it's well worth investing plenty of time and effort into finding life insurance
that will properly take care of the family's future.