This is the fourth installment in our Life Insurance for Moms series. If you haven’t read the first few, please click the link below to view it:
- Life Insurance For Moms: Non-Negotiable?
- Life Insurance For New Parents: A Must Have
- Life Insurance For Single Moms: Your Greatest Responsibility
If you are a family searching for family plan life insurance, it may seem like a pretty convenient way to purchase your life insurance. Unfortunately, it’s not all rainbows when you start comparing premiums.
Some companies even offer you a “discount” to bundle your life insurance with other forms of insurance.
Don’t be fooled!
Family plan life insurance is indeed convenient, but you’ll likely pay extra for the convenience factor. Avoid bundle programs and you’ll pay significantly less for your coverage.
Whichever you choose, here are the pros and cons.
Family Plan Life Insurance
It’s a tactic used by many retail stores, grocery stores, or other types of shopping arenas where the company making the offer tries to get you to purchase something you weren’t really looking for, but it may be something you find value in. It’s called cross selling.
Buy 3 of this, we’ll give you 1 of those at no additional cost!
Nothing is free. There is a built in cost somewhere. Insurance is no different, especially family plan life insurance.
Offers in the insurance industry usually stem from already owning things like car insurance and homeowner’s insurance with one company, and the offer is to buy life insurance as a “bundle” to save a certain percentage on the packaged price. Unfortunately, it’s pretty much a scam. It’s an offer which is really in the best interest of the insurance company.
- They get more lines of insurance in your household, which increases the likelihood you stay with them longer
- They are diversifying their risk across multiple categories, or lines, of insurance
- They are offering you convenience but reaping the benefits in the form of premiums
But what does it mean for you as the consumer?
- Should you ever want/need to change companies for just one line, you’ll end up having to look at all your lines to ensure you’re still getting the best deal
- You are placing all your eggs in one basket, assuming the insurance company is the best in each category, which no company is
- You are paying more in dollars for the convenience of just one bill
- You’re probably seeing a bundle discount now, but it’s more likely just an introductory rate
Your portfolio of insurance products is a lot like your portfolio for retirement: diversifying to get the best in each industry means spreading out your money over different companies.
If you do like the convenience of paying just one premium, there are plenty of insurance companies who offer legitimate deals to get your family plan life insurance all in one. What this means is, you’re not bundling your life insurance with car and home, but rather bundling your life insurance with your husband and kids.
You’re actually going to get a good deal in most cases when you do this because you’re spreading the risk of life insurance across multiple people, which is good for the insurance company as well. They can pass this savings of risk to you in the form of savings of premiums. You’re also getting all your life insurance policies on one bill, making premium payments as easy as ever.
Family plan life insurance also has a few benefits, which are company specific, which individual life insurance does not have. For example, some family plan life insurance policies actually allow you to add additional children at no cost, and without underwriting. Once they hit a certain age, as young as 15 days, you simply call the insurance company, give them the new social security number, and the child is added immediately.
So how do you know if you’re getting the best deal on an insurance plan? You’ll still need to go shopping.
Just because you go to a life insurance specific company does not mean you’re getting a great deal. You’ll still want to use an independent life insurance agent to outsource the work for you. Tell the agent exactly what you’re looking for as far as coverage amount, how long you’ll need the insurance for, and how many lives the plan will need to cover.
Individual Life Insurance Plans, Built For Families
Don’t be surprised if the agent comes back to you with a hand-made family plan!
Even if you request a full family plan for your life insurance, a good agent will still review your options if you were to alternatively buy individual policies and simply add the children as a rider. Because some companies specialize in many different areas of life insurance, you may still save money by creating your own plan.
For example, let’s say you are looking for a plan, and just one of you in the family is a tobacco user.
The family members who are non-smokers might get excellent ratings from one company, but the tobacco user might get an undesirable rating from that particular company. By outsourcing the smokers policy to a different company, you may be able to save a significant amount of money.
If you do end up using multiple companies, you can give it the look and feel of a family plan life insurance billing system by altering your payment dates so everything falls on the same payment schedules.