Protecting Your Family With Life Insurance

Carrie Schwab-Pomerantz on

Start with a net worth statement, which is simply a list of all your assets and liabilities. Next, you'll want to review your income and expenses and include any future liabilities (e.g., additional debts, college costs) and future financial resources (e.g., Social Security survivor benefits) that might come along. The amount of insurance you need will be the difference between the two.

Some individuals might also want to incorporate charitable, business and other legacy goals. The more complicated your situation, the more it makes sense to meet with a trusted financial advisor, insurance professional and, possibly, an estate planning attorney.

And in the final analysis, make sure the insurance fits within your budget. It doesn't make sense to purchase a policy that you can't afford.

Timing Matters

It's often better to buy life insurance sooner rather than later. Life insurance is cheaper the younger and healthier you are; a big health change can even make you uninsurable. It's like that old expression: The best time to buy flood insurance is before the flood. Don't delay.

Understand the Two Main Types of Life Insurance

The two main types of life insurance are term and permanent. Term insurance is sometimes called "if I die" coverage. It covers you for a fixed period of time like one, 10, 20 or 30 years. At the end of term, most policies lapse. Because most life insurance needs are finite (at some point, most kids will be on their own and the mortgage paid off), term insurance is very cost-effective.

Permanent life insurance (whole life, variable life, universal life, among other types), on the other hand, is described as "when I die" coverage. As long as you pay enough in premiums to keep the policy in force, a death benefit will pay out. Coverage is designed to last a lifetime. These policies will have additional features including the ability to build savings or "cash value" that some individuals find attractive.

In a way, the difference between term and permanent life insurance is like the difference between renting versus buying a home. Term insurance (like renting) is the most cost-effective solution over shorter periods of time and makes the most sense for most families. Permanent insurance (like owning) is more expensive upfront but allows the policy owner to build equity over time, and it can be the best choice for families who know that they will need insurance far into the future.


Also, you don't have to choose one type of policy over the other. You can mix and match to get the right coverage.

Group Versus Individual Policies

You mention that you have group life insurance through work, but that may not be enough. Group policies have limited underwriting, so if you're in worse-than-average health, it could be a great solution. If you're in better-than-average health, it might be cheaper to purchase individual coverage that's customized to your needs. Also, if you opt for group insurance, you should check to see what happens when you leave the company.

You can buy individual insurance on your own or working with an agent. Take your time to understand what you're buying, why an agent might be recommending it and the financial strength of the insurance company that's backing it. Shop around, and do your homework.

Insurance isn't the most exciting thing to think about, so it can easily fall to the bottom of our to-do lists. That said, I view it as important to almost every financial plan -- for dads and moms. And life insurance, in particular, can be one of the biggest gifts that you ever give to protect your growing family. Congratulations again as you enjoy Father's Day!


Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of "The Charles Schwab Guide to Finances After Fifty." Read more at You can email Carrie at The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at

Copyright 2020 Creators Syndicate, Inc.



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