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Beyond Breadwinners: Life Insurance For Families

There is a myth that only breadwinners need life insurance. You still need to consider other members of the family, even if they’re not the primary sources of income, since they also contribute to the household. For instance, stay-at-home parents provide child care, laundry, cooking, shopping, and cleaning services that would otherwise need to be supplemented if they can no longer perform their tasks. 

Another myth is that people who are healthy don’t need insurance. Yet, the best time to invest in life insurance for families is when you’re young and healthy—before accidents and unexpected illnesses happen. 

As breadwinners, you should also consider the health of your dependents, including your spouse, children, parents, and relatives. Remember that life insurance is non-transferable. That’s a hard lesson you wouldn’t want to learn firsthand while a relative is in a life-threatening condition unprotected by life insurance.

With these in mind, below are some considerations for breadwinners when investing in life insurance for families:

Considering Your Provider

It’s critical that you choose a reliable provider with a proven record of stability and financial strength. With a trusted company, you can be assured of proper guidance in searching for life insurance for families that best fit your needs. 

When You Have No Children

When it’s just you and your spouse, life insurance can provide the support you will need in the event that you need to switch to a one-income household. Consider student loans and mortgage payments that you would need to keep paying. 

Then there are those illnesses that you may not have prepared for, which could set you and your partner back considerably. These are things you need to think about to determine whether or not you need life insurance when you don’t have children.

Considering Your Options

It’s integral for breadwinners to carve out time to understand the different kinds of insurance plans and their terms and policies. Each type offers different levels of protection, a specific end-date or lifetime coverage. 

Take the time to compare quotes, so you’re sure that you’re getting the best deal out of your policy. Also, consider buying premiums with expanded coverage in terms of period, illnesses, and beneficiaries.

Listing Your Beneficiaries

Single-income households are most in need of life insurance for families. Expand your coverage to include your spouse, children, aging parents, and even your siblings. Consider everyone who relies on your income, and those you foresee will depend on you over time. You would also need to choose your trustee or guardian for beneficiaries who are minors.

Furthermore, you would need to decide on whether or not your declared beneficiaries can be revoked or not. When they are revocable, you wouldn’t need their consent if you want to make changes to your policy. 

Another difference between revocable and irrevocable beneficiaries pertains to taxes. With the former, the benefit will be subject to tax deductions once they receive it. Irrevocable beneficiaries, on the other hand, will receive the benefit tax-free when they get the benefits. As such, you need to weigh your options carefully when choosing between consent and taxes.

Beyond Your Employer Coverage

While many employers offer their employees life insurance, you might want to expand the coverage of their minimal offer. Moreover, breadwinners should consider that they may not stay with the same company for the entirety of their careers. Once you leave the company, you would have to make your own payments or leave a gap in the coverage.

Breadwinners should consider purchasing life insurance coverage aside from the one their employers have offered them. By doing so, you can plan ahead for lulls in your employment or career shifts. 

How Much Coverage Is Enough?

A good rule of thumb breadwinners should consider when purchasing life insurance is to obtain at least seven to 10 times of your income. This amount should help supplement your family’s expenses while they find ways to replace the income that was lost. If you want your family to maintain the same lifestyle, you would need to increase that number.

Moreover, breadwinners should consider the amount of debt that they carry. You should also factor in financial goals and future education costs. There will be added expenses that come with unforeseen events, and you should consider all of these when investing in life insurance for families.

Empower The Stay-At-Home Parent

First, consider the life insurance gender gap. There is a common misconception that the partner having a higher income needs more insurance. However, when considering insurance plans, you should also remember the financial contributions to the household, including the work of a stay-at-home parent in childcare and household management.

Moreover, the sole provider of the household’s income needs to consider equipping their partner at home with better protection. When unforeseen circumstances happen, you wouldn’t want to add to the emotional strain of the other parent. Consider the losses that could take place—the loss of spouse, parent, and finances.

Childcare services don’t come cheap; even long-term babysitters can add to the family’s expenses. There will be increased expenses following the loss of the breadwinner’s income. Having a payout can serve as a cushion for the surviving parent as they try to make ends meet.

Reevaluate your current policy

There may be changes to your household income along the way. If anything, the pandemic has taught us to prepare for these life changes that can have a significant impact on our finances. Thus, it’s recommended to review your life insurance policy on an annual basis. Go over your current debt, financial responsibilities, goals, and increase in income as you adjust your life insurance policy.

Before You Go

Investing in life insurance as early as possible for breadwinners can mean protecting your family from the unknown. Single moms and new parents, in particular, need life insurance for their families the most. 

With proper planning, life insurance ensures the support of your dependents and your children’s education. Even those with no children have to prepare for changes in their income and settling of outstanding debts. Remember to check for all of your options and go back to your policy every year to see if you need to expand its coverage.