When buying life insurance for your family, there’s no one-size-fits-all solution. A policy that’s perfect for you may not be right for your spouse, child, parent or grandparent.
Understanding your options can help you create the best family life insurance plan for your loved ones.
What is family life insurance?
Family life insurance is the catchall term for policies that cover different members of your family. You can use these policies to cover a range of costs, such as funeral expenses, college debts, lost income or child care.
In general, life insurance is important for anyone whose death would place a financial burden on others.
You can determine who needs life insurance by looking at the roles your family members play and their long-term financial responsibilities.
Breadwinner: Life insurance can replace lost income if a primary earner dies.
Nonearning spouse: Life insurance can help pay for services a spouse currently provides for free, such as cleaning and child care. These services can be expensive to replace: More than half of families in America spend at least $10,000 a year on child care, according to the 2020 Cost of Care Survey by Care.com.
Child: Children typically don’t need life insurance, because no one relies on them financially. However, there are benefits to these types of policies. Child life insurance can help lock in low rates and be used as an investment vehicle for your kids.
Parent or grandparent: Older family members may not need life insurance if no one depends on their income, but a policy can cover funeral expenses or debt, such as mortgage payments on a home you want to keep in the family.
To help create the best family life insurance plan, think about your long-term goals. For example, if you need life insurance as a new parent, perhaps your most important goal is to protect your income. If so, consider increasing your own coverage instead of buying life insurance for your child.
Individual life insurance options for couples
The best option for most couples is to buy separate life insurance policies for each spouse. There are two types of coverage available: term and permanent life insurance.
Term life insurance is typically sufficient for most families. You can set the length of a term policy to cover you until your kids are grown, your mortgage is paid off or your family no longer relies on your income.
Permanent life insurance policies, such as whole life, offer lifelong coverage and build cash value. However, these policies are generally more expensive than term life insurance.
Average rates for $500,000 term and whole life policies
Age at purchase
Source: Quotacy. Lowest three annual rates for men and women in excellent health.
Joint life insurance options for couples
In some cases it may make sense to buy a joint life insurance policy — often called second-to-die or survivorship life insurance — that covers both you and your spouse. In general, joint life insurance policies for married couples are a type of permanent life insurance that pay out after both policyholders die.
The main purpose of survivorship life insurance is to help cover major costs, such as estate taxes or lifetime care for a child with a disability, after both parties die. If only one spouse dies, the surviving spouse doesn't receive a death benefit and is responsible for 100% of the premiums moving forward. Therefore, these policies are suitable only for couples who are financially independent and can cover living costs without the help of a payout.
As with marriage, joint policies are a long-term commitment. Splitting a policy during a divorce can be complex, and you must be certain you can support yourself if your spouse dies before you.
Another factor to consider is cost. Premiums depend on the age and medical histories of both you and your spouse. The severe medical conditions of one spouse can drive up the cost of the entire policy. As a result, you might be better off buying two separate policies and tailoring them to fit your individual needs.
On the flip side, if you’re both healthy, sharing a policy might work in your favor. Insurers don’t have to pay out survivorship benefits until both parties die, which means they spend more years collecting premiums. This translates to lower risk for the insurer and lower rates for you.
Average rates for a $500,000 survivorship life insurance policy
Age at purchase
Male + female, both 40
Male + female, both 50
Male + female, both 60
Male + female, both 70
Source: Quotacy. Lowest three rates averaged for men and women in excellent health.
What is first-to-die life insurance?
First-to-die life insurance is a rare type of joint life insurance that pays out after the first policyholder dies. Few insurers — if any — offer these policies because most people don't buy them. Here’s why: First-to-die life insurance is only slightly cheaper than buying two separate policies. And it pays out after the first spouse dies, leaving the surviving spouse with no coverage. In most cases, it makes more sense to cover each person separately and get a payout regardless of who dies first.
Life insurance policies for children
Children don’t typically need life insurance. If you want to cover unexpected costs or save for your child’s future, you’re generally better off opening a savings account.
However, policies designed for children are available if you want coverage. In general, these policies are a form of whole life insurance, which means coverage is valid for the child’s life, as long as the premiums are paid. Policies typically include a cash value component, which you can borrow against or withdraw if the policy is canceled. However, building cash value is a perk and shouldn’t be the only reason you buy a policy.
Rates for child life insurance are typically fixed and don’t increase over time. Some insurers allow you to pay off the policy after 10 or 20 years, leaving the death benefit intact for the child’s lifetime.
In some cases you can lock in the option to add more coverage in the future, regardless of the child’s health later in life. However, you can typically increase coverage only at predetermined ages, yearly intervals or approved events, such as when the child marries or becomes a parent.
Average rates for a $25,000 whole life insurance policy for children
Age at purchase
Average annual rate (male)
Average annual rate (female)
Source: Quotacy. Average of three lowest rates.
Life insurance plans for parents or grandparents
You may not need to buy coverage for older members of your family, especially if no one relies on them financially. However, policies are available for those who want to provide an inheritance or cover specific costs such as funeral expenses or estate fees.
Elderly family members may find it tough to qualify for life insurance due to their age or health. As a result, coverage can be expensive.
There are four main types of life insurance for seniors:
Term life insurance covers the policyholder for a set number of years and then expires. There’s no payout if the insured person outlives the term.
Whole life insurance is a type of permanent life insurance that builds cash value. It guarantees a payout when the policyholder dies, so it costs more than term coverage.
Guaranteed universal life insurance is a combination of term and permanent life insurance. These policies offer lifelong coverage but typically build minimal cash value. Although they’re often cheaper than whole life policies, you can lose coverage if you miss a payment.
Guaranteed issue life insurance is a type of permanent life insurance that guarantees coverage regardless of your age or health. In general, applicants must be between 40 and 85 to apply. While the guarantee might sound appealing, guaranteed issue life insurance can be expensive for the low coverage it offers.
Life insurance rates for seniors
Average monthly rate for a 70-year-old
10-year term life insurance
Guaranteed universal life insurance
Whole life insurance
Guaranteed issue life insurance
Source: Quotacy. Average of three lowest rates.
Family life insurance solutions through work
If you get coverage through work, you may be able to add supplemental life insurance for a spouse or child. But review your current plan before purchasing more coverage, as your basic policy may already cover your spouse or child for free.
There are pros and cons to getting group life insurance through work. Rates are rarely locked in, which means your premiums can increase as you age. There are limits to how much coverage you can buy for yourself, a child or spouse, and costs vary among employers. Shop around: You might be able to get more coverage for less on the open market.
Certain rules may also restrict your options. For example, you may need to purchase supplemental coverage for yourself before buying additional life insurance for your spouse or child. Supplemental coverage through work is not always guaranteed, which means you may need to complete a life insurance medical exam or prove you’re not a risk to insure before qualifying for additional coverage.
When buying additional coverage through work, check if you can take the policy with you. Group life insurance is typically tied to your employment. In short, if you leave your job you might lose coverage.
Life insurance riders for your family
If you want the convenience of a single policy but need extra coverage for your spouse or child, consider adding riders to your base term or permanent life insurance policy.
Life insurance riders expand the coverage of your base policy by covering a specific person or need. You can buy riders on the open market or through your employer if your company allows. You might have to add riders when you first buy the policy, or pass a medical exam to add a rider later. Not all insurers offer the same riders, and availability can differ among states.
Here are three common types of family life insurance riders:
Spouse term riders are valid for a set number of years but can’t last longer than the base term policy to which they’re attached. You may be able to convert your spouse rider to a whole life insurance policy at a later date.
Child riders cover a set period of time and pay out if the child dies during that period. These riders typically cover children from 15 days old to 25 years old. At that point, the child may have the option to convert the rider to an individual life insurance policy. Age restrictions for parents vary. For example, you may need to be older than 18 and younger than 55 to add a child rider to your policy.
“Other insured” riders typically can cover anyone you have an insurable interest in, which means you would suffer financially if the person dies. In theory, this could be a parent or grandparent. However, premiums and coverage amounts are typically based on the applicant’s age, gender and health, which might restrict access for elderly family members.
Life insurance riders are not always worth it. Depending on the amount of coverage you want, you might be better off buying a separate policy to cover a family member instead of adding a rider. This is because riders are typically canceled if the policyholder dies, leaving the family member with no insurance.