Insurance provides your household with a certain amount of protection. You typically end up with access to cash or reduce service costs, allowing you to avoid financial hardships in specific scenarios. When it comes to life insurance, finding a suitable family insurance policy can feel like a challenge. Luckily, there are things you can do to make sure you end up with the ideal plan for your needs.
Estimating Your Family Insurance Needs
Before you start looking for a policy, you need a general idea of how much coverage you require. If you want to be precise, you first need to identify all of your family’s long-term financial obligations and determine how they relate to each person. This can include anything from debt payments to homeowner’s insurance to food costs.
Then, you identify your assets and subtract their value from the previous total. The difference reflects your insurance needs. However, this approach can be difficult to navigate, especially if you want to make sure your family remains financially stable for a long period, such as the time it takes for the youngest child to reach college age.
Calculating Your Needs
If you want a quick alternative and only one adult in the house works, calculate the total income and multiply it by ten. Then, if you want to make sure college costs for any children are covered, add $100,000 for each child. You may also want to add additional money for final expenses, to pay off a mortgage completely, or to accomplish any other task that is important to you. That number is how much the primary breadwinner needs in coverage.
After that, you can explore how much coverage the remaining family members need. For stay-at-home parents, make sure to acquire some coverage. Along with final expenses, you can also compensate for costs that would occur after their death, like the need for childcare for any children.
In most cases, coverage for children only needs to cover final expenses and possibly some lingering medical bills.
For two-income households, the process is similar. However, it takes into account that the other person will continue to bring in an income, so the amount of coverage each individual requires would be different.
Finding the Best Family Insurance Policy
Once you have an idea of how much coverage you will need, it’s wise to shop around. There are numerous insurers available, and each will offer different plans and have different costs.
When you speak with a representative, discuss your goals first. While you may have an estimate at the ready, you don’t need to lead off with that number.
Instead, go through the details you used to create your estimate. For example, discuss the debts you want to pay off, final expenses you anticipate encountering, or costs that you want to make sure are covered. The insurance provider will then produce its own estimate.
Once you hear their estimate, you can discuss the figure if the need arises. Often, if they come up with something close to what you were expecting, only a little conversation may be necessary. However, if they think that a significantly higher or lower number is appropriate, you can find out why. You may end up with some powerful insights, allowing you to make a smart decision before you commit to an insurer.
Speak With At Least Three Providers
Aim to speak with at least three life insurance policy providers, though five may be better. Before you reach out, read online reviews or get recommendations from friends and family members. Like all service-oriented industries, not all companies are created equal, and some have better reputations than others.
Ideally, all of the family insurance plan quotes should be similar. However, if one company is dramatically higher or lower than the others, both in terms of the recommendation and the cost of coverage, you may want to remove them from the mix. An extreme discrepancy from the pack suggests something is amiss, so be wary before going forward with that insurer.
Otherwise, by using the tips above, you can find the best family insurance policy for your household.
Do you have any tips for finding the best family insurance? Share them in the comments below.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.