How life insurance helps families
From missing a loved one to various financial impacts, even young families aren’t immune to the after-effects of death. “When someone passes away and they don’t have life insurance, [the family’s] savings get eroded and their long-term financial goals get wiped out,” says Lee Browning, a founding partner and senior advisor at Southlake Wealth & Estate Group in Richmond Hill, Ont. “I need to know I did my job [as a provider] so that doesn’t happen.”
While Browning’s day-to-day work is all about balancing dollars and cents, he recognizes his job has a greater purpose: to make the right recommendations so his clients have financial support when they truly need it. A family protection plan is invaluable to many of Browning’s clients, including a young couple he worked with in 2014. After meeting them, he processed their application immediately and they were approved for a life insurance policy with super-preferred status. In other words, they had glowing bills of health and, as a result, were able to qualify for low, affordable premiums to protect their family of four, which includes two sons. “I never procrastinate with protection when young children are involved,” he says.
A year later, the father was diagnosed with an aggressive cancer, and he passed away within two months. Because of the family’s planning, Browning was able to deliver the insurance benefit the family needed. With this money in hand, the mother could take a leave of absence to heal herself and her children, without carrying the weight of financial stressors.
What is family life insurance?
Family insurance doesn’t have an industry-wide definition like, say, term or whole life insurance does. Instead, it’s a provider-created package; therefore, it varies from one company or broker to another, and comparing packages isn’t straightforward. But in broad terms, family insurance is a package of different types of life insurance to cover a family (and generational wealth) for life. For instance, you may choose a package that includes term insurance until retirement with added-on child riders, as well as riders for critical illness and disability. (Find out if critical illness insurance is worth it.). Or it could be a package that includes term insurance to age 65 in addition to a whole life policy to cover funeral expenses. Another option? Create a package with whole life, critical illness, disability, a child rider, plus another whole policy to cover estate-transfer costs. Below, we list the different types of life insurance coverage and how they might fit into a plan for your family.
How to choose the best life insurance for your family
Once you embrace the importance of securing a family life insurance plan, there’s quite a lot to learn—including popular industry lingo and the policies that match them. Here’s a cheat sheet to understanding the basics:
What it is: Just like its name, term life insurance offers coverage for a fixed term (length of time). Terms can be as little as five years or as long as 100 years.