6 Things You Didn't Know About Getting Life Insurance

couple with new baby

Of course, you don't want to think about what would happen if you or your partner should pass away. Who does? But once you have a child, you really should give serious thought to getting life insurance. Don't worry; no one's asking you to picture worst-case scenarios here -- just to be practical about the choices you're making for your family.


There are some -- correction, LOTS -- of things to know about life insurance that will affect your decision-making process. Here are some things not everyone knows before doing their research.

You'll have to choose between "term" and "permanent" life insurance.

If it's "term," you'll pay a premium for a set number of years -- say, 10 or 20. Pass away during that time and your family will receive money. "Permanent" life insurance comes with much higher premiums, but that extra money buys you a policy that lasts until you die. (Plus, some of your premium may be invested and go into a savings account that you're able to use.)

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Which is better? You'll need to talk it over with an insurance agent, but if you're relatively young and healthy and don't want to break the bank, the answer is term insurance.

There is a "best" time to buy life insurance.

It's when you're young and healthy. That's because the cost of your policy hinges on your age and state of health. (In most cases, you'll need to undergo a physical when you apply for an insurance policy.)

But if you've been putting off life insurance for years or battling serious health issues, don't worry. All companies have different policies and prices. You still may be able to get coverage; it will just cost more.

Both parents should get life insurance, even if one of you doesn't work.

Yep, stay-at-home parents should be insured, too. Caring for a child takes time and money. What would happen if one of you weren't there? Life with just one caregiver means you'd need to arrange for childcare -- but what else? A move to a smaller, more affordable home? A switch to a different school?

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Life insurance can't bring a loved one back, but it could help ease a family into their new life.

Certain things about your lifestyle could keep you from getting approved for life insurance.

Having a dangerous occupation like being an airline pilot or a commercial fisherman, or having a thrill-seeking hobby like skydiving or mountain climbing, could affect the approval of your policy. If you're turned down by one insurer, try another; they all have different requirements.

Under certain circumstances, you can get the proceeds of your insurance policy while you're alive.

If you have a terminal illness, some insurers offer "accelerated death" or "living" benefits, which allow you to collect part of your payout while you're still alive. It's up to you how to spend the money. Some people pay off their medical bills. Others cross things off their bucket list. In some cases, you will have to pay interest for that early withdrawal, though -- and using the cash now means your family will get a smaller amount after you pass.

Your annual salary isn't the only factor you should consider when deciding on a coverage amount.

There are several things to consider, from the cost of a funeral to any unpaid medical bills and credit card debt that will need to be paid off. Once all that's taken care of, how much money will you still need to keep your family (comfortably) afloat? Mortgage payments, bills, and childcare costs should all be factored in.

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Listen, we dig a "live for today" attitude, but once you have kids, it's important to think about the future. It's totally worth it to talk to an insurance agent about your policy options.

Will you have to make some uncomfortable decisions? Probably. But you'll gain peace of mind knowing that your kids will be cared for in case of an emergency.


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