If you’re looking for life insurance to cover your family, we round up the best options.
Our picks for the best family life insurance companies are TruStage, Ethos and Bestow based on our research and scoring system. We at the MarketWatch Guides team have reviewed dozens of life insurance companies based on coverage options, cost and reputation to help you make an informed decision. However, as you shop for policies, keep in mind that the best life insurance coverage and rates for your family will vary by age, health and other factors.
Top 5 Family Life Insurance Companies
Family life insurance policies can be plans that cover multiple members under one policy or separate policies. Below is our list of top life insurance picks for families:
- Ethos: Our top pick
- TruStage: Our pick for whole life coverage
- Bestow: Our pick for online term policies
- Fidelity: Our pick for accidental death coverage
- State Farm: Our pick for customer satisfaction
What Is Family Life Insurance?
Family life insurance is one or many life insurance policies that provide a death benefit upon the death of a family member. The sum can help surviving family members avoid financial strain — the benefit can cover debts, mortgage payments, funeral costs and everyday living expenses.
In some cases, the person serving as the family’s main source of income has permanent coverage — whole life insurance, for example — while a term policy covers other family members, including spouses, parents and children.
Types of Life Insurance
Life insurance is a financial agreement that pays a tax-free death benefit in a lump sum to beneficiaries when people covered by the insurance policy pass away. The lump sum payout can provide a financial cushion to help family members pay for funeral costs, end-of-life bills and other living expenses. How life insurance policies work and features included can vary depending on the policy type.
Term Life Insurance
Term life insurance is the most basic type of policy and often the most affordable. Under a term life policy, policyholders are protected within a certain period of time, such as 10, 20 or 30 years. If you outlive the policy’s term, the insurance may expire or you could renew or convert the term policy into a permanent policy. When renewed or converted, policy premiums are likely to increase because you’re older. There are different term life insurance types:
- Level term
- Decreasing term
- Return of premium
- Renewable life
- Convertible life
Permanent Life Insurance
Permanent life insurance is a type of life insurance that stays in place as long as you pay the premiums. While more expensive than term policies, permanent insurance has a cash value amount. Your money accrues over time, and you can get some or all of it through a loan or withdrawal. You can even use the cash value to pay premiums.
Whole life insurance policies offer a fixed death benefit and level premiums, while universal life policies may offer adjustable benefits and premiums. Depending on the permanent policy type, cash value may earn interest or can be invested. Types of permanent policies are:
- Whole life insurance
- Universal life insurance
- Variable life insurance
- Variable/universal life insurance
How Much Is Family Life Insurance?
The cost of family life insurance depends on your circumstances, policy type and coverage options. There are many factors that affect insurance premiums, including your age, gender, lifestyle habits and more. Many insurers also offer online estimate tools you can use to determine how much you will pay for coverage.
Life Insurance for Couples
Life insurance offers some financial protection for couples, depending on your unique situation. Whether you are married or have children can play a factor in whether you need life insurance coverage at all, and if so, how much you need. For example, if you and your partner have made major purchases such as buying a home or car, or if you have children or are planning a family, life insurance can ensure the surviving spouse can continue to cover these expenses.
You also have a choice between separate life insurance policies, each covering one partner, or a joint life policy, also known as survivorship life insurance. Joint life policies have potentially lower premiums and more flexible underwriting. On the other hand, separate policies for couples are easier to customize and can offer living benefits.
Factors That Affect the Cost of Life Insurance
Insurance companies set insurance rates based on your risk profile, which they determine during the underwriting process. Factors that can affect your insurance rates include:
- Age: Insurance premiums typically increase the older you are.
- Gender: Men pay more for life insurance because women have a longer life expectancy.
- Health: Insurance providers may require a medical exam to determine how healthy you are. Having a pre-existing medical condition could increase your insurance premiums.
- Family medical history: A history of family medical conditions can also affect your cost.
- Tobacco use: Not smoking could lower your premiums because of the risk smoking can pose to your health.
- Occupation/Lifestyle: Working in a high-risk job or participating in high-risk hobbies could increase your premiums.
- Chosen coverage: The type of coverage you choose, the amount of your death benefit and optional riders included in your policy can affect your premiums.
Is Life Insurance Worth It?
At a minimum, it’s a good idea for the family breadwinner to have life insurance because it provides a revenue stream for the family when the primary source of income is gone.
Having insurance that covers a stay-at-home parent or parent with a low salary can be worthwhile because the death benefit can pay for tasks they manage, such as childcare. Coverage for children isn’t always necessary, but could make sense for kids who have health conditions and a higher mortality risk.
Employers may offer group life insurance coverage as a health benefit to employees, and that coverage could be enough to protect your family, depending on your situation. Life insurance may not make sense for families with older adults who have paid-off mortgages and grown children. If assets can cover your affairs, there’s likely no need to pay for additional coverage.
Young adults and couples without many financial responsibilities might not need life insurance either. However, consider that when you’re younger and healthier, life insurance is less expensive. Locking in a term policy while your rate is low could be a cost-effective plan because you may have children or more people to financially support later down the road.
Our Conclusion About Life Insurance for Families
The right insurance plan can be different from one family to the next. State Farm is a top choice for service because it ranks high for customer satisfaction. Transamerica makes our list because of how efficiently it processes claims. Shopping around can help you find an insurance provider with adequate coverage and features that meets your budget and family’s needs.
Frequently Asked Questions About Life Insurance For Families
Family life insurance looks different for each family. You can insure the entire household with one policy that bundles coverage, either as a joint policy or with riders that add coverage for other individuals. Another option is buying separate policies. Comparing options and premium costs can help you find the right coverage.
Term life policies are often the simplest and most affordable policies that cover families for a period where they have large expenses (mortgage payments, childcare bills and tuition). If you die during the term, your family will have money from the death benefit to cover these major costs, and there may be money left over.
Life insurance options for families vary by provider. In some cases, spouses can get a joint life insurance policy. Or you can add riders that cover additional people to an individual policy. Another option is buying separate life insurance policies for each family member.
Life insurance provides a death benefit when a member of your family dies. This lump sum payout is tax-free, and you can use it to pay for funeral costs, end-of-life bills and living expenses. You can also use life insurance payouts as an inheritance.
At a minimum, life insurance coverage for adults and children can pay for final affairs, which are sometimes costly. According to the National Funeral Directors Association, the median cost of a viewing with burial is $7,848 and $6,970 for cremation. Medical bills are another type of end-of-life cost a death benefit could help pay for. Any money left over could go toward living expenses and other bills that arise.
While living, cash value accumulated from children or adult policies could be tapped into to cover expenses, like education costs. However, investing in education savings plans over a long period could provide a greater return and be a better way to pay for school.