What is not covered by life insurance?

In most cases, any death will be considered valid by your insurer when the time comes to pay out on the death benefit. However, there are a few exceptions. Death by suicide may not be covered during the first two or three years that the policy is in effect, although after that time, it may be allowed. There may also be specific circumstances that void your policy. For example, there may be restrictions if the death is caused by a "hazardous activity" or from a risky profession or hobby such as sky diving. Your policy may also not pay out on a claim if it is discovered that you intentionally misrepresented anything in your application, although this exclusion, too, may only apply for the first few years the policy is in force. Your policy should spell out what is excluded, so it's a good idea to review it to ensure you understand the limits of its coverage.

What happens if you outlive your term life insurance policy?

If you don’t pass away within the policy term, your term life insurance policy will expire and your beneficiaries won’t receive a death benefit. If you want to maintain your coverage beyond the number of years set out in your term policy, you may be able to convert to permanent insurance before the policy ends if your policy includes a conversion rider. Additionally, your term policy may be “renewable” which means there may be an option to renew your coverage year after year at the end of the term — although these renewal premiums are generally much higher than your original premiums. Talk with your life insurance agent to verify the details of your individual policy.

Who needs life insurance the most?

It may be in your best financial interest to prioritize getting family life insurance when you have dependents who rely on you. This is true for both working and stay-at-home parents, as either your income or your role in the family may need to be replaced if you pass away. For older parents, life insurance can help cover costly medical expenses and resolve debt that your survivors may not be able to afford when you’re gone. If you have no dependents or don’t have any type of financial insecurity, a life insurance policy may not be worth the price. You may also decide based on your financial situation that your children do not need life insurance. Instead, you may choose to consider an educational savings account that comes with tax benefits since it provides another way to save money for your children’s future.

Can I get life insurance without completing a medical exam?

In some cases, yes, it is possible to purchase a policy without a medical exam. There are several types of no-medical-exam policies, and they are differentiated by the type of underwriting involved in their creation. In traditional underwriting, a medical exam is required to help the underwriter assess the risks involved and thus to determine the premium. Some carriers, however, offer simplified, accelerated or even automated underwriting. These may use data and algorithms, electronic health records or a health questionnaire that you fill out to determine your premium. There is also a type of policy called guaranteed issue life insurance, which, as the name suggests, you cannot be turned down for as long as you’re eligible (qualified individuals typically range between 45 and 80 years old). This type of policy may have a lower death benefit, and it may cost more than underwritten policies.

What is the best life insurance company?

Determining the best life insurance company for your needs involves considering the factors that are important to you. A good first step is to think about whether you need a term policy that provides low-cost coverage for a certain range of years or the more robust options offered by permanent insurance. Consider your health, too, since each company underwrites risk factors differently. You may want to work with an independent agent or broker who can help answer questions and give you guidance in narrowing down the type of coverage you need. When you've done that, it’s beneficial to ask for quotes from a range of likely carriers for the same types and levels of coverage to see which insurer is able to offer you the best rate.

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Family life insurance

Written by

Mary Van Keuren

Edited by

Natasha Cornelius, CLU

Updated Nov 01, 2024

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict ,this post may contain references to products from our partners. Here's an explanation for .This content is powered by HomeInsurance.com (NPN: 8781838). For more information, please see our .

The Bankrate promise

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict ,this post may contain references to products from our partners. Here's an explanation for .This content is powered by HomeInsurance.com (NPN: 8781838). For more information, please see our .

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Technically, there is no type of life insurance known as family life insurance. In general, however, the term refers to policies that benefit your family by providing financial support after your passing. Family life insurance plans can pay for funeral expenses, tuition costs or mortgages. They can help pay down debt and allow your loved ones to maintain a lifestyle that is comfortable for them. In the case of permanent policies, they may include the ability to access cash reserves while you are alive. Bankrate's insurance editorial team created this guide to help you understand the ins and outs of life insurance so that you can choose the best family life insurance for your specific situation at a cost that won't break the bank.

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What is family life insurance?

If you are wondering whether you need family life insurance, a good first step is to consider the financial consequences that would result if you were to pass away. If you have a partner or spouse, would they be able to maintain the lifestyle that they currently enjoy? If you have children, how will your spouse manage all the costs of raising and educating a child in your absence? A robust life insurance policy can cover these costs and more.

There are two primary categories of life insurance to choose from: term and permanent.

Term life insurance

Term insurance is temporary coverage that lasts for a certain number of years, often between 10 and 30. It's an inexpensive option, but it's important to note that the policy only pays out a death benefit if you die while the term is in effect unless it includes a rider that allows you to convert it to a permanent insurance policy.

Permanent life insurance

Permanent insurance is the other main type of life insurance. These policies are intended to last for your lifetime, as long as you pay the premiums. They also feature another benefit, called the cash value, that allows you to earn interest on part of the premium you pay for the policy. In many cases, you can borrow from that amount during your lifetime. Permanent insurance is usually more expensive than term insurance but has the added benefit of cash value and lifetime coverage.

Why consider buying family life insurance?

Family life insurance may help to secure your family’s financial future if the unexpected occurs. Family life coverage doesn’t consist of just one policy but can include multiple policies to provide coverage on all family members, such as both parents and children. A family member’s death benefit may be used to cover costly funeral expenses, but it can also be used to cover major outstanding debts or help replace lost income.

Your family life insurance policy can also be included as part of your general financial strategy, especially if you have a permanent policy with cash value accumulation. For high-wealth individuals, there may be tax benefits that an insurance policy offers to both you and your beneficiaries. A financial advisor can help you determine if this is true for your case.

Buying life insurance as a parent

When you’re a parent, a life insurance policy provides a level of financial security in case you or your spouse dies during a time when you still have kids or other dependents at home. It can help to replace income when a working parent passes away unexpectedly. And, for a stay-at-home parent, the death benefit can help cover the costs of childcare, cooking and cleaning if the parent who normally handles these tasks passes away. Think about the value of your income, debts and other relevant expenses when figuring out how much life insurance you may need for each member of your family.

You may be in the process of deciding what policy type is right for you. The following policy types are popular options for parents.

Term life insurance: Term life insurance is typically much cheaper than whole life insurance, as the coverage is temporary. As a result, term policies may be a great option for families on a budget who only want life insurance coverage for a specific number of years, such as when their children are young and financial support is likely most critical.
Whole life insurance: Whole life insurance is typically much more expensive than term life, as it remains in effect for your entire lifetime and a payout is considered inevitable. It also comes with a cash value account that can gain interest, you may be able to borrow against over the course of your life. Depending on the type of whole life you get, you may also be eligible to receive dividends based on the insurer’s annual profits. Depending on your goals, whole life insurance may be a great option for some families.
Universal life insurance: Universal life insurance typically costs more than term but less than whole life insurance. It’s a permanent coverage option that offers more flexibility for the policyholder; the premium and death benefit can often be adjusted based on your life circumstances. Like whole life, universal accumulates cash value you can borrow against, but you can also withdraw from it.
Joint life insurance: Joint life insurance is commonly shared by married couples. It provides coverage on two people, under one policy. These policies may cost less than two individual policies, depending on each partner’s health conditions, and will either pay out when the first person dies or once both have passed away.

First-to-die joint life insurance policies pay out the death benefit when the first spouse dies. This type of policy may be cheaper than purchasing two separate policies. The other option is a second-to-die policy, which pays out the benefit after both spouses pass away.

Joint life insurance policies

As a less-commonly discussed type of life insurance, you may be wondering how joint life insurance policies work. Joint life insurance is typically considered a type of permanent life insurance, which is effective for as long as you pay the premiums. It covers two people and can be structured to build cash value and yield a tax-free death benefit. However, you may also be able to purchase joint life insurance policies that expire after 20 or 30 years, similar to term life insurance.

Joint life insurance policies are not as common as individual insurance policies but may be right for couples who both expect to have some form of life insurance in place. In some cases, buying a joint policy can be cheaper than if two individuals have separate policies. The two different types of joint life insurance include first-to-die life insurance, where the benefit is paid when the first of the two spouses dies, and second-to-die life insurance, where the benefit is paid when both spouses die. If you’re not sure which type of joint life insurance policy would be right for you, it may be beneficial to review a life insurance guide or talk with a licensed life insurance agent.

PROS

It can often be cheaper due to less underwriting labor.
It can be helpful with estate planning by relieving some of the issues caused by probate (the process of validating and executing on a will).

CONS

If one person has health issues, a joint policy may increase the other person’s life insurance costs.
Joint life policyholders may need to wait a longer time before the death benefit can be paid out.
If policyholders are married, a divorce could complicate the process of splitting the joint insurance.

Buying life insurance policies for children

Most families may not instinctively consider getting life insurance for their children. After all, children typically don’t contribute financially to the household and they are generally at a lower risk of death than older individuals. However, there are a few reasons why life insurance for children could be helpful. The first reason would be to account for an untimely passing, in which case you could take out a small policy to cover final expenses.

Another reason is to lock in an affordable whole life premium at a young age before any pre-existing conditions appear. Developing health conditions could make it expensive for a child to get their own insurance later in life as a young or older adult. Instead, you could get a policy early and transfer the policy to your child when they turn of age, typically 21 years old.

Can you buy life insurance for your parents?

While there are strict rules about who you can take out a life insurance policy on, you can purchase life insurance for your parents to help cover any expenses they may leave behind. Buying family life insurance for your parents can help them (and you) financially in a number of ways. For example, a death benefit can help the surviving parent if they largely rely on the other for retirement income or other benefits.

Some riders may even allow them to tap into policy funds to pay for long-term care. Alternatively, if you’re named the beneficiary for a standard life insurance policy, you would receive the benefit when the policyholder passes away. This might help replace any income you’ve lost or expenses you’ve incurred if you act as a caregiver in their final years.

Frequently asked questions

In most cases, any death will be considered valid by your insurer when the time comes to pay out on the death benefit. However, there are a few exceptions. Death by suicide may not be covered during the first two or three years that the policy is in effect, although after that time, it may be allowed. There may also be specific circumstances that void your policy. For example, there may be restrictions if the death is caused by a "hazardous activity" or from a risky profession or hobby such as sky diving. Your policy may also not pay out on a claim if it is discovered that you intentionally misrepresented anything in your application, although this exclusion, too, may only apply for the first few years the policy is in force. Your policy should spell out what is excluded, so it's a good idea to review it to ensure you understand the limits of its coverage.
If you don’t pass away within the policy term, your term life insurance policy will expire and your beneficiaries won’t receive a death benefit. If you want to maintain your coverage beyond the number of years set out in your term policy, you may be able to convert to permanent insurance before the policy ends if your policy includes a conversion rider. Additionally, your term policy may be “renewable” which means there may be an option to renew your coverage year after year at the end of the term — although these renewal premiums are generally much higher than your original premiums. Talk with your life insurance agent to verify the details of your individual policy.
It may be in your best financial interest to prioritize getting family life insurance when you have dependents who rely on you. This is true for both working and stay-at-home parents, as either your income or your role in the family may need to be replaced if you pass away. For older parents, life insurance can help cover costly medical expenses and resolve debt that your survivors may not be able to afford when you’re gone.

If you have no dependents or don’t have any type of financial insecurity, a life insurance policy may not be worth the price. You may also decide based on your financial situation that your children do not need life insurance. Instead, you may choose to consider an educational savings account that comes with tax benefits since it provides another way to save money for your children’s future.
In some cases, yes, it is possible to purchase a policy without a medical exam. There are several types of no-medical-exam policies, and they are differentiated by the type of underwriting involved in their creation. In traditional underwriting, a medical exam is required to help the underwriter assess the risks involved and thus to determine the premium. Some carriers, however, offer simplified, accelerated or even automated underwriting. These may use data and algorithms, electronic health records or a health questionnaire that you fill out to determine your premium. There is also a type of policy called guaranteed issue life insurance, which, as the name suggests, you cannot be turned down for as long as you’re eligible (qualified individuals typically range between 45 and 80 years old). This type of policy may have a lower death benefit, and it may cost more than underwritten policies.
Determining the best life insurance company for your needs involves considering the factors that are important to you. A good first step is to think about whether you need a term policy that provides low-cost coverage for a certain range of years or the more robust options offered by permanent insurance. Consider your health, too, since each company underwrites risk factors differently. You may want to work with an independent agent or broker who can help answer questions and give you guidance in narrowing down the type of coverage you need. When you've done that, it’s beneficial to ask for quotes from a range of likely carriers for the same types and levels of coverage to see which insurer is able to offer you the best rate.