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Family Life Insurance Plans (Yea or Nay?)

Let’s face it, regardless of how “easy” someone can make purchasing a life insurance policy, at the end of the day; it’s safe to say that there are 1000’s of other things that most folks would rather spend the afternoon doing.

This is why…

The allure of being able to purchase a “Family Life Insurance Plan” may seem quite appealing. 

But…

Just because it might be “easier” to purchase a life insurance policy that is designed to encompass one’s entire family doesn’t AUTOMATICALLY mean that it’s the right thing to do!

After all…

Not all family members will have the same insurance NEEDS, not to mention, not all families will stay the SAME for years and years to come. This is why we wanted to take a moment and discuss some of the “variables” (including no medical exam life insurance options) one should factor in when shopping for a life insurance policy for the whole family.

Questions that will be addressed in this article will include:

  • What are “Family Life Insurance Policies?
  • What are some of the potential “Cons” of purchasing a Family Life Insurance Policy?
  • Why does IBUSA recommend that folks purchase individual life insurance policies instead of “family plans”?
  • What can I do to make sure I’m buying the right life insurance policy for me?

So, without further ado, let’s dive right in!

While we here at IBUSA can understand what the “appeal” of purchasing a Family Life Insurance can offer someone

What are Family Life Insurance plans?

Family life insurance plans are “insurance plans,” which are intended to help a client insure his or her immediate family under one policy with one payment. Which, on the face of things, may seem like a good idea because, after all, most of us probably already have enough separate bills that we need to pay each and every month.  

The only problem is…

That sometimes, having all of your coverage “locked up” within a single policy isn’t always the best idea. In fact, we’d be willing to bet that in MOST situations, it’s actually going to be a BAD idea. Bad for several reasons, which we’ll now discuss.

What are some of the potential “Cons” of purchasing a Family Life Insurance Policy?

Before we get into “why” someone might not want to purchase a Family Life Insurance Plan, we want to make it clear that the insurance companies that offer these “types” of family plans are generally VERY GOOD life insurance companies.  

And most of them…

Will offer individualized life insurance policies as well. It’s just that they also understand that some folks just like the simplicity of making one monthly payment vs. several, which is why they choose to offer these “types” of life insurance policies as well.

“But don’t get fooled by simplicity.”

Because there are two excellent reasons why buying a Family Life Insurance Policy isn’t a good idea.

Reason #1. Insurance needs change.

Seeing how most life insurance policies are designed to last 10 to 30 years, it’s not all that difficult to imagine why purchasing a single life insurance policy for the whole family might not be such a great idea.  

Now…

There are many examples we could use which could demonstrate this point very clearly, such as one spouse choosing to become a stay at home parent whereby the amount of insurance originally purchased may no longer be necessary, but the sad truth is that the most common problem that affects these types of life insurance policies is divorce.

In cases of divorce…

These “types” of life insurance policies tend to fall apart, causing many individuals to have to seek out new coverage years later after they purchased their “family plan”. Only now, they’ll be looking for a new life insurance policy as an older applicant with potentially additional pre-existing medical conditions, which may make it more difficult (if not impossible) to qualify.

Reason #2. No “One Size fits all”.

One of the main reasons we here at IBUSA choose to work with dozens of different life insurance companies is that not all life insurance companies will be the “best” for everyone.

Some insurance companies are… 

Going to cater to the very young and healthy, while others will choose to become more competitive when it comes to certain types of pre-existing medical conditions.  

For this reason…

A family may pay more for their Family Plan than they would have had they choose to purchase individual life insurance policies because they would have been able to individual target those life insurance companies that would be more “forgiving” of certain medical conditions.

Conditions such as:

  • Hypertension,
  • High cholesterol,
  • Depression,
  • Diabetes,
  • Sleep apnea,
  • Etc…

Why does IBUSA recommend that folks purchase individual life insurance policies instead of “family plans”?

While it is true that only having to make a single payment each month to an insurance company to cover an entire family is nice, in our opinion, this benefit doesn’t outweigh the potential “pitfalls” being locked into a single policy can lead too.

Not to mention the fact…

That when someone chooses to lock him or herself into a “family plan,” they’re also potentially locking themselves into a contractual agreement that may prevent them from making any “individual” changes to their policies later on. Changes such as converting at term life insurance policy into a whole life insurance policy or dropping portions of one’s coverage as one’s needs change.

For these reasons…

In addition to many others that go beyond this article’s scope, we almost always encourage all of our clients to avoid purchasing a “whole family life insurance policy”. 

Instead, we focus on determining exactly each family member’s needs and design a policy specifically for each. The good news is that when our clients purchase their insurance this way, not only are they able to save money (in many cases), their also able to maintain greater flexibility with their policies later in life.

What can I do to make sure I’m buying the right life insurance policy for me?

The first thing you can do to make sure that you find the “right” life insurance policy for you and your family is to make sure that you consider all of your options (or at least several) before deciding to apply for coverage.

Now we can…

Understand why it may seem a bit “daunting” to consider having to speak with several different life insurance agents and go through the whole “sales process” over and over, but that’s not what we’re suggesting. What we’re suggesting is that if you are seriously considering purchasing a Family Life Insurance Policy, take a moment and give an insurance brokerage like IBUSA a call first.

This is because…

Here at IBUSA, we will be able to shop dozens of different life insurance companies simultaneously for you, which will allow you to instantly compare what your Family Life Insurance Policy is offering you with all of it’s “constraints” and compare that to owning several different life insurance policies and all the freedom that those will offer you later on down the road!

So, what are you waiting for? Give us a call today, and let us show you what we can do for you!

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