Life insurance isn’t exactly what most people in the U.S. would consider a fun topic, not least because it makes you ruminate on your own mortality. Still, it’s something that you typically can’t put off forever, and if you’re about to become a parent, now is a great time to start looking for a life insurance policy.
Life insurance is meant to provide you with peace of mind, and it provides financial protection to your loved ones. Any life insurance policy will guarantee a death benefit that can be used to cover final expenses and any other financial obligations you may leave behind should the worst come to pass. Becoming a parent means that you’ll have at least one new family member arriving, so it’s a great time to start thinking about how much coverage you’ll need.
It’s best to go ahead and get a policy from an insurance company sooner rather than later. It’s easier to get a larger coverage amount for a lower premium when you’re still relatively young and in good health, and you’ll be more likely to pass any required medical exam without issue.
Of course, becoming a parent is expensive, so you’re likely concerned about life insurance rates. Fortunately, there are quote aggregates online these days that can help you get accurate quotes from all the most trusted insurance companies. Here are some of the most popular types of life insurance, so you can start thinking about what kind of plan is best for you and exploring quotes.
Term Life Insurance
A term life policy simply provides a death benefit for an agreed upon period of time. Term lengths are generally decided in increments of 10 years, but you may be able to find a policy that renews on a yearly basis for a higher premium. Speaking of premiums, they’re the main draw of term life insurance, since they tend to be more affordable than any form of permanent life insurance.
A term life insurance policy can be a great option as a starter policy, since you can always upgrade it to permanent insurance later. It’s also perfect for those who just need temporary coverage while they work toward financial goals. Maybe you and your spouse just need coverage until you can cover your child’s college tuition, for example.
Whole Life Insurance
This is one of the most popular forms of permanent coverage, and it includes a savings component in addition to the death benefit. This kind of insurance coverage will accrue cash value over time that you can borrow against or make withdrawals from. The rate at which cash value is accrued increases if you pay your monthly premiums ahead of time. Just remember that making too large of a withdrawal can chip away at your death benefit, and any amount borrowed will have to be paid back with interest.
Universal Life Insurance
Universal life covers forms of life insurance that provide low premium rates like term life but also include additional benefits. Take variable universal life insurance, for example. This type of coverage includes an investing component, so you can accrue cash value over time with subaccounts that act like mutual funds. Your investments can be impacted for better or worse by market changes. This volatility means that a variable insurance policy has the potential to accrue cash value faster than all other plans, but it’s also the riskiest.
It’s difficult to pin down average rates for any life insurance policy. Many factors go into calculating your rate during the underwriting process, such as the type of life insurance, how much life insurance coverage you need, your health and age at the time of applying, your lifestyle (whether you engage in risky behavior, essentially), and more that go into determining your premium. The more accurate information you can provide when looking for quotes, the more accurate your quotes will be.