What Is The Best Type of Life Insurance For Families in 2025
Life Insurance For Families
No one likes to think about worst-case scenarios,
But the truth is, planning for what could happen is how we protect the people we love.
That’s why “Life insurance “is a quiet kind of security.
It is there for your family, when you can’t be.
Life insurance isn’t for you; it’s for the ones who depend on you.
There are three types of Life Insurance:
Term Life Insurance
Whole or Permanent Life Insurance
Final Expense (Burial) Insurance
Let’s break it down.
Life insurance is meant to protect the people we love
Reasons Why Parents Should Consider Life Insurance
Reasons to purchase life insurance vary from person to person. But, in the end, what matters most is that it provides financial security for you and your loved ones. Here are five reasons why families should consider life insurance:
1. You’re the Primary Wage Earner
It’s best to consider the "what-ifs," especially if you are the primary wage earner.
Your salary covers all household expenses such as rent, groceries, childcare, and bills; so if something were to happen to you, would your family be financially okay? Even if your partner works, it can still be difficult for them to manage expenses and support the children.
Life insurance provides your beneficiaries with a death benefit to effectively replace your income. This can also be helpful if you and your partner do not have a substantial emergency fund. Your family could continue covering necessary expenses without deleting all your savings.
2. Access Funds Early in Case of Serious Illness
It's important to understand that life insurance is not just for after you're gone; it can also provide support while you're still alive.
Many policies offer an Accelerated Death Benefit (ADB) rider, which allows you to access a portion of your death benefit early if you're diagnosed with a terminal or critical illness. These funds can help cover medical bills, home care, or simply allow you to spend more quality time with your loved ones without the burden of financial stress.
3. Pay Off the Mortgage or Rent
For most families, paying a mortgage or rent is the largest expense.
You’ve worked so hard to provide a shelter for your loved ones, and you want that to continue even after you're gone.
That’s why life insurance has got you covered.
If you pass away before the mortgage is paid off, your family could use the death benefit to keep up with the payments or possibly pay off the mortgage entirely.
4. Support College and Other Major Life Events
Even if you cannot be there in person, life insurance can help secure your child’s future.
Whether it’s helping with college tuition, covering the cost of books, planning a wedding, or simply supporting everyday living expenses, choosing life insurance today means you’re giving your loved ones the financial support they may one day count on.
It’s not just a policy, but it’s a promise that their dreams for tomorrow won’t be put on hold because of life’s unexpected turns.
5. Protect Your Family Business
If you own a family business, the payout from a life insurance policy can provide the necessary funds to keep the business running.
The payout can help preserve your legacy by giving your loved ones or heirs the financial support, making sure all your hard work lives on, and your business stays strong for years to come.
6. Investment Growth and Wealth Building
Certain types of life insurance, such as whole life or universal life policies, offer the added benefit of building cash value over time. This cash value can be accessed through loans or withdrawals, providing a source of funds for emergencies, retirement, or other financial needs. The dual benefit of protection and investment growth makes life insurance a versatile tool in your overall financial strategy.
Which Life Insurance Plan Is Best for You?
There are three options:
Term Life Insurance
Whole or Permanent Life Insurance
Burial Life Insurance
Term Life Insurance
Term life insurance is the most affordable type of insurance policy, allowing you to set up your coverage by determining the duration and amount based on your financial situation and goals.
Typically, the terms can range from 10 to 30 years.
Think of term life insurance as an agreement between you and the insurance company, where you select your coverage amount and the term length. During this term, you will make regular monthly or annual payments, known as premiums, to keep the policy active.
In simple terms, if you (the insured) pass away while the policy is active, your beneficiaries (loved ones) will receive a tax-free payout called a death benefit. Once the term ends, the coverage expires, and no cash value is paid out.
It's important to note that even though term insurance is relatively affordable, there is a high chance that you may outlive the policy.
If your coverage expires, you still have the option to apply for a new life insurance policy. However, the premium you will pay may be higher depending on your age and health at that time.
Benefits
Term insurance is often the first choice for most families due to its:
Affordability- Monthly premiums are significantly lower compared to whole or permanent life insurance, as it doesn’t build cash value.
Coverage Amounts- Huge coverage amount relative to the premiums you pay.
Flexibility/Comfort- You can choose a term length that meets your financial situation and personal needs.
Unique features- Return of Premium (ROP)
You buy a term life policy just like normal.
Pay monthly or yearly premiums for the full term
If you outlive the policy, you get all the money you paid back
However, ROP policies usually cost 20–30% more than traditional term policies
Who is Term Insurance most Suitable For
Term insurance is often the best choice for young families or new parents who are working with a limited budget, providing sufficient coverage for their needs.
Young families usually require higher life insurance coverage for several reasons:
They may have significant debt from student loans, credit cards, or a mortgage.
They have young children who depend on them for support.
They may have low savings or no emergency funds.
One of the advantages of term insurance is that you can choose the duration of the policy.
This allows you to select a term that ends when your major debts are paid off, your children are self-sufficient, or your savings or retirement funds are sufficient to support your loved ones without needing life insurance.
If you would like to learn more about term life insurance, please feel free to check out our blog for more detailed information.
Whole Life Insurance
Whole life insurance, also known as a permanent life insurance policy that provides protection that lasts for a lifetime.
Three important aspects of a whole life insurance policy include:
A guaranteed death benefit
Builds cash value over time
Covers you for a lifetime.
Unlike term life insurance, whole life insurance does not expire. However, the premiums for whole life insurance tend to be much higher.
Whole life insurance is unique because it includes two key components: cash value savings and a death benefit.
The cash value is the savings-like part of your policy that grows over time while you are alive.
This is the money you can access or borrow against while the policy is active. However, if you pass away and have taken out a loan against the cash value (including any interest), that amount will be deducted from the death benefit. The remaining balance will then be paid to your beneficiary.
Benefits
Paid-up policy: Once you've paid all the required premiums, the coverage stays in place for the rest of your life (no more premiums).
Cash Value: "Cash Value" is a savings component that grows over time at a guaranteed rate, and the growth is tax-deferred, meaning you don't pay taxes on the interest as it grows.
Loan Access: You can borrow against the cash value in your policy. If you still have debt, the policy can help you pay it off.
Dividends: If the policy is bought from a mutual fund company, you can receive annual dividends.
Who is Whole Life Insurance most Suitable For
This type of policy is ideal for families who:
Want guaranteed coverage that lasts a lifetime
Like the idea of building savings (cash value) over time
Prefer something steady, reliable, and want to build generational wealth
Final Expense (Burial) Insurance
Burial insurance, also known as final expense insurance, is an important type of whole life insurance designed to cover costs like funeral expenses, medical bills, burial fees, and unpaid debts. Given the high cost of funerals, having a burial insurance policy can relieve your loved ones from these financial burdens after your passing.
Burial insurance works similarly to whole life insurance in that:
It lasts your entire life.
It builds cash value over time.
It pays out a guaranteed death benefit to your beneficiary.
You might wonder why someone would choose a larger whole life policy when a burial insurance policy could offer cheaper premiums with a similar structure.
The reality is that burial insurance typically provides smaller coverage amounts, usually ranging from $5,000 to $25,000. However, it can be a straightforward and affordable solution for older adults or individuals with health issues.
Life Insurance Riders
In addition to the benefits provided by term and whole life insurance, you can always enhance your policy by adding riders. While riders come with an additional cost, they offer extra benefits and can be tailored to your preferences.
You can add riders to both term and permanent life insurance policies. Some riders are available directly through insurance companies, while others may be offered through your employer.
An easy way to think about riders is to picture yourself in Chipotle
Term Life Insurance = Bowl
Whole Life Insurance = Burrito
Life Insurance Riders = Ingredients
Though there are several types of riders, the most common ones for families include:
Spouse rider- Spouse rider provides life insurance coverage for your spouse for a limited time (usually for the duration of your main policy). You can also convert this rider into a separate, full policy for your spouse before it ends.
Child rider- A child rider offers temporary life insurance coverage for children, typically from 15 days old up to 25 years old. It also offers a small death benefit, if something were to happen. Similar to the spouse rider, once the child becomes an adult, the rider can sometimes be converted into a regular life insurance policy.
Cost-of-Living Adjustment (COLA) rider- Your death benefit increases over time to keep up with inflation.
Frequently Asked Questions (FAQs)
Is Whole Life Insurance the Right Type of Permanent Coverage for Me?
To determine if a life insurance policy is right for you, you need to determine if the benefits it offers are worth the cost. Keep in mind that whole life insurance is not the only viable option available.
If you are looking for insurance that provides lifelong coverage while being budget-friendly, check out the following two options:
1. Guaranteed Universal Life (GUL): GUL offers lifelong coverage at a lower premium, but it builds minimal cash value. If your primary goal is to secure lifelong protection without a savings component, GUL may be a suitable choice.
2. Life Insurance Retirement Plan (LIRP): This plan provides permanent life insurance coverage and includes a death benefit in case of unexpected events. Additionally, you can utilize the savings from a LIRP to supplement your retirement plan.
What Happens If I Miss a Payment?
Both types of policies typically have a grace period of 30 days.
If you miss a payment and do not take further action, your coverage may lapse, resulting in the loss of coverage and any accumulated cash value. Some permanent policies may use the cash value to cover missed payments.
If you no longer wish to keep the policy, it’s best to surrender it to receive the accumulated cash value, though this means you will forfeit future coverage. You can also use that cash value to purchase term life insurance instead.
Is There Life Insurance That Covers the Whole Family?
Yes, you can obtain coverage for your whole family.
To do this, you can purchase a full policy for yourself and then add riders to cover your spouse or children.
As previously mentioned, these riders typically include a Spouse Rider and a Child Rider.
This may be a great option, especially if you want additional protection for your loved ones.
Another option to consider is “Joint Life Insurance”, which covers two individuals (usually spouses) under a single plan.
Take the Next Step
Keep your loved ones protected by exploring life insurance options with SJM Cares.
Feel free to contact us or fill out the form below for more information.
Our team is here to help you find the policy that works for you!
