Image via Unsplash
Everything a Modern-Day Mom Needs
to Know About Purchasing Life Insurance
Becoming a mother means accepting many news shifts in priorities -- one of which is prioritizing life insurance. That’s especially true if you weren’t already covered under a policy before you started raising a family. In the event that you’re unable to provide for your children, a life insurance policy will protect your surviving family members and provide them with the financial security they need to get by. Before making a decision, however, it’s important to review your options carefully.
Two of the most common types of life insurance include term and whole life policies, as these provide for surviving family members in the event of your death. However, as Money.com explains, the type of policy you purchase should depend on your stage of life.
Term life insurance is best for young adults without children. If the insured passes away, surviving beneficiaries receive a death benefit to cover the cost of a funeral — and sometimes even unpaid medical bills and other lingering debt. However, these benefits only cover the insured for a specific period of time.
Whole life insurance is best for young adults with children. As a type of permanent life insurance, whole life policies provide surviving family members with a death benefit if the insured should pass away. The policy’s cash value will accumulate as time goes on, and the insured can choose to borrow money against it as needed. Depending on the situation, however, other permanent life insurance policies such as universal life or variable life may be better options to explore.
As you can see, whole life insurance is best for parents. while term life insurance is ideal for single adults without children. However, remember to shop around for the best deal.
Do Stay-at-Home Parents Need Life Insurance?
If you or your partner stay home to look after the children while the other parent earns an income, you may be wondering if the stay-at-home parent needs to be covered under life insurance. According to Smart Money Mommas, life insurance is just as important for stay-at-home moms and dads, as the insurance payout can be used to pay for things the stay-at-home parent was responsible for. For instance, the payout could be used to cover the cost of education, household duties, and childcare.
How to Purchase Life Insurance
Once you’ve decided on the best type of life insurance for your family’s needs, it’s time to purchase a policy from a reputable insurer. Typically, you can buy life insurance online, through a company that sells life insurance, or from an independent agent or broker. However, be prepared to provide the insurer with proof of your income and identity, and personal information such as your name, gender, age, income, and height and weight.
Moreover, some insurers may require you to undergo a medical examination when applying for life insurance, but this isn’t always the case. For instance, policies like guaranteed issue, simplified issue, and medically underwritten life insurance don’t always require medical examinations as part of the underwriting process. Guaranteed issue policies insure you regardless of your age and health status, and simplified issue life insurance requires you to complete a questionnaire but not a physical examination.
With medically underwritten life insurance policies, however, you may need to undergo an exam in some cases, but specific requirements vary by insurer. Typically, the need to undergo a medical exam will depend on the information provided on your application.
Before purchasing no-exam life insurance, note that these policies often cost more than those that do require an examination — especially if you’re looking to buy a whole life insurance policy. If you’re hoping to save on life insurance, a policy that requires a medical examination may be a better choice for you.
If financial constraints are preventing you from purchasing life insurance at this time, one potential way to free up some money each month -- which can help cover the cost of your premium -- is through refinancing your mortgage. With conventional loans being attractive these days, you might wonder about things like, “Can you refinance an FHA loan?” As PennyMac points out, a conventional loan might mean a bigger loan or smaller payment, although you would want to weigh the costs involved. Make sure that your equity, the down payment, and the closing costs are balanced in a way that bring benefits to your financial situation.
Once you start raising a family, you’ll find peace of mind in knowing that you can provide for your loved ones even in the event that you can no longer care for them. Mothers are always one step ahead of the game when it comes to protecting their children, and purchasing a good life insurance policy will validate this even further.