There isn’t anything you wouldn’t do for your kids in this life. You’d do everything in your power to give them the very best life possible, even if that meant moving mountains. But protecting your children’s futures doesn’t require you to lift national monuments — just smart financial planning decisions, including choosing the right life insurance policy.
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That’s because with the right life insurance, you know that even if something happens to you, your family will not falter financially without your income. You can rest assured that your children’s education will be covered, and they can focus on healing and growing instead of being burdened by lingering debt or expenses they can no longer afford.
But finding that life insurance isn’t always easy — it can feel overwhelming to deal with all the details, terms and options available when shopping around, especially when your choices will impact your children for decades to come. Fortunately, there are a few core questions that should be on every parent’s checklist.
All life insurance is not created equal. Term insurance is pretty much exactly what it sounds like, covering you for a set term (think 10, 20 or even 30 years). Generally, it comes with lower premiums, making it a good fit for many families who want coverage during their prime working years.
Conversely, whole life insurance is also true to its name, covering the policyholder for life. It’s generally more expensive than term, but that’s because it comes with a guaranteed death benefit and a built-in savings component known as cash value. This cash value grows over time, tax-deferred, and can be borrowed against or withdrawn under certain conditions. This added financial flexibility makes it appealing for long-term planning, especially for high-income households or those focused on estate planning.
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To truly determine which kind of insurance will meet your family’s goals and needs, you’d be wise to consult with a financial planner or licensed insurance expert.
One of the most common mistakes many well-meaning parents make is assuming that they only need coverage equal to several years’ worth of salary. In truth, you’ll need significantly more than that: determine how many years of income your family would need to maintain their current lifestyle. Factor in whether your surviving partner works and how long they might need financial support, as well as how much time it will take for your youngest child to become financially independent.
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