Recommended Life Insurance Coverage for Young Families

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The first step is to calculate how much coverage you truly need. The most important step is to determine your short-term and long-term financial needs. Short-term financial needs cover consumer debt and outstanding loans such as your mortgage, home equities, vehicle loans, and student loans.

Long-term needs have no expiration date, and include financial support for your children and spouse, estate planning, and funeral costs. Consider the additional expenses your family would incur if you passed away.

Non-working spouses need life insurance too! Would you have to hire a maid or take time off work to do the extra housework? Remember to take your kids' future education costs into account.

Choose a plan that makes sense for your needs

Temporary or “term” plans cover short-term needs and are generally inexpensive. Long-term needs are covered by permanent plans, such as “universal” and “whole life” policies.

For most young families, the practical solution is to buy a term policy to cover the total amount of your mortgage and debt, and discuss with your financial planner whether to invest in a permanent policy or simply build up your savings.

Buying permanent life insurance for your kids is an investment in their future. It locks in low premiums (sometimes for pennies a day) and teaches them financial responsibility when they are old enough to take over the policy.

Work within your budget

It makes no sense to buy life insurance that you cannot afford. If your policy lapses, you may have to start over, which means even higher premiums. Beware of cheap insurance through your job, which offers good coverage but usually cancels if you change jobs.

Plan for the inevitable, not just the unexpected

Don’t wait until you are in bad health! Having a plan in place before emergencies happen is crucial to protecting your loved ones, both financially and emotionally. With proper coverage in place, you can have protection as well as peace of mind.