Family life insurance is the new hot thing in the insurance world. It puts together two things everyone loves: family and . . . insurance! Or maybe that second one’s just us. (We really do love insurance, though.)

But family, right? Who doesn’t love their family? We think part of loving your family well means making sure they’re protected and provided for no matter what. And if you think about it, we’re sure you’d agree. So, family life insurance sounds like a no-brainer for someone who loves their family, right?

Wait just a minute. Let’s talk this out—because sometimes a well-phrased marketing slogan can fool even the savviest shopper into a dumb purchase. Especially when it’s aimed at your family feels.

We’re going to tell you the truth about family life insurance: how it works, how much it costs, and whether it’s a good fit for your family.

What Is Family Life Insurance?

Family life insurance is a relatively new term, but it’s an old-school product. Usually when you hear about family life insurance, it’s a policy package made up of two main features: a joint life insurance policy for you and your spouse and a child rider.

So, what’s it all about? Let’s just say, we’re not fans. Here’s why.

The Joint Life Problem

Joint life insurance has a ton of problems. First, it’s whole life. And we’ll explain exactly how we feel about that in a minute. 

Second, in most families’, one spouse makes more than the other—sometimes a lot more. Joint life takes a one-size-fits-all approach by paying out the same exact benefit to either spouse.

So, you end up paying a lot more to insure your spouse’s part-time income from a side hustle than you would if you were to simply buy term life coverage (the only kind we recommend) for each spouse.

We always recommend getting separate term life policies for each spouse. When you go that route, you can make each spouse’s policy fit their own income and get the right coverage—all at a much lower price than you’d see with any form of joint life.

The Whole Life Problem

When life insurance companies push family life insurance, they’re always selling you some form of whole life insurance. That’s bad for two big reasons. First, whole life policies mix life insurance with low-return investments. But life insurance shouldn’t be trying to do two things at once. Its one and only job is to replace your income if you die. It’s not an investment.

The second reason? Whole life policies are permanent. They stay in place for as long as you pay the premiums. But you shouldn’t need life insurance forever. After all, if you follow the Ramsey Baby Steps, you’ll end up being self-insured! Then you can pocket those insurance premiums for yourself.

The Bait and Switch Problem

Another problem with family life insurance is the common misconception that you’re getting some kind of deal by buying insurance that covers not just you, but your spouse and kids as well.

Compare Term Life Insurance Quotes 

Here’s the thing: It’s illegal to give people discounts on life insurance premiums. Companies might imply they’re giving you a break, but it’s both untrue and impossible to deliver (without breaking the law). Life insurance policies are legally required to be underwritten based on your own personal details, and that’s where the premium amount comes from. In the case of joint life coverage, both spouses’ medical histories will come into play.If you do see a discount, it’s because you bundled your family life insurance with other coverage, like home insurance or auto insurance. Not because you got some “special” family life insurance deal.

While we’re on the subject, we are big fans of bundling your coverages to save money. And our trusted partners at Zander Insurance are happy to help you do that! So why not get all the insurance you need and save money? Win-win all day.

The Child Rider

A child rider is an add-on to a basic policy that provides a death benefit to cover final expenses. And there are times you might want to add this rider to your main life insurance in case the unthinkable happens to your child. (We’ll talk more about how that works a little later.)

Who Should Get Family Life Insurance?

Like we said up top, it’s not like we aren’t fans of insurance—and family! We love our own families, want to protect them, and we feel all the feels.

But you can’t let the emotional marketing get to you. Because most family life insurance will always be packaged as some form of whole life rip-off, we recommend you avoid it. (Duh. By the way, whole life is also sometimes marketed as permanent life insurance.)

So, what’s the better alternative? We’ve got you covered. The recipe is similar to the traditional family life insurance mix, with a key ingredient swap: Term life is in, and whole life is out.

If you want to provide awesome life insurance for your family (and we know you do), we recommend three basic steps:

• Shop the best coverage and value for yourself, which will always be a term life policy that fits your annual income and time of life. The rule of thumb is a 15- or 20-year policy worth 10–12 times your annual income.
• Run the same numbers on your spouse and get them their own separate term life policy.
• Add a child rider to one of those policies (if you need it). For a $500,000 policy, you’ll pay on average between $166 and $290 per month.¹

Speaking of which . . .

Life Insurance Riders for Children

In case you were wondering, children don’t need their own life insurance policies since they almost never have any income to replace. But as we mentioned above, a child rider on your term life policy can be a wise move. And that depends on where you are with your financial progress.

If You’re Already out of Debt

If you’re debt-free (everything but the house), instead of paying insurance premiums for an unneeded children’s life insurance policy (or a child rider), put that money in an emergency fund. By stashing away 3–6 months of living expenses, you can easily cover the cost of a funeral—or any other emergency that might pop up along the way.

If You’re Still Paying Down Debt

If you don’t have that money saved yet, no sweat. You can get a rider for your children on your term life policy (or your spouse’s).

This kind of rider covers all your kids (no matter how many you have) until they’re no longer living at home.

Now that’s family life insurance we can absolutely get behind. Doing it that way is awesome because you’re not wasting time or money with whole-life scams—plus you’re still getting essential life insurance coverage. You’re taking care of your children, both spouses are covered on separate policies instead of on one, and the policies will simply fade away by the time you no longer need them.

How Much Is Family Life Insurance?

If you’re defining family life insurance the way most insurance companies sell it—in other words, as a whole-life scam—then it’ll be pretty expensive.

Just to give you an idea of how expensive, whole life is usually 10–20 times pricier than term life. It’s really common to pay thousands annually for one whole life policy, let alone another one for your spouse.

But what about family life insurance coverage using term life policies and a child rider? If you go that route, you’ll be looking at some huge savings!

In the tables below, we broke down some examples of average term life insurance rates by age, gender and payout. These rates are average prices for $1 million of coverage. This should give you an idea of what you can expect to pay to get your family covered with term life.

Monthly Term Life Insurance Rates for a 30-Year-Old Male

Monthly Term Life Insurance Rates for a 30-Year-Old Female

Monthly Term Life Insurance Rates for a 40-Year-Old Male

Monthly Term Life Insurance Rates for a 40-Year-Old Female

To take an example from the tables above, imagine Jim and Heather (both 30) and their little baby Sophia. They both want 20 years of coverage in case the unthinkable happens to one of them before Sophia grows up. And they want their death benefits to be worth $1 million on each spouse. But they also don’t quite have their emergency fund as full as they’d like, so they decide to add a cheap child rider to Jim’s policy. Here’s how the numbers look:

• Jim’s policy costs $54 a month.
• Heather’s policy costs $43 a month (after all, women live longer, so insuring them is cheaper).
• Sophia’s rider adds a measly $5 a month, but it helps them all sleep better (well, maybe not Sophia).

So, you’re looking at around $100 a month for the entire package. That means you’d save about $700 a month compared to a typical family life insurance scheme.

What could you do with $700 extra in your budget every month? Anything you want! We recommend Jim and Heather chuck it into their emergency fund until it’s full, then drop the child rider for even more savings.

Should You Buy Family Life Insurance?

We don’t really recommend family life insurance. At least not what most of the marketplace would sell you under that label.

Because as we showed you above, it’s usually just a newfangled term for a big old mess. But that’s not to say that having yourself, your spouse and your kids (if necessary) covered with life insurance doesn’t matter.

It does matter. A lot! But you have to be smart about the size and type of life insurance you get. Here’s a reminder: Get term life insurance with coverage that’s 10–12 times your income and a term of 15–20 years.

Know what else we recommend? Working with our trusted partner Zander Insurance when you shop term life. They’ve been helping people find the right term life plan for decades.

It’s been said that customers have to pick two among speed, quality and price. With Zander, you can have all three. Don’t believe us? Check out a few feel-good stories from fans we met through our Ramsey Baby Steps Community Facebook group.Zander helped Ryan B. save time and money:

“Zander got me about 30 quotes in 30 seconds and I got to choose the best one, so I’ll always roll with them. I saved money on a $700,000 policy at age 30.”

Good going, Ryan!

Here’s more high praise from Sergio C.:

“I got term life from Zander. It doesn’t matter which carrier you decide on—it’s all about the peace of mind you get from being responsible. It means making sure your loved ones are taken care of in case you pass.”

Sergio took care of business while taking care of family. We love that!

And one more big hit from Diane R.:

“We had fantastic luck with Zander. They found us a great company for a fantastic price.”

Nailed it!

What about you? Are you and those you love well covered? Remember, life insurance has one job: to replace your income if you die. It’s there to provide for your loved ones, not to make them rich.

Maybe now you’re thinking, Wow, I need term life insurance. Just go to our estimator and start the process or talk to the experts at Zander Insurance. Like we said, they’re a RamseyTrusted partner, and they’re exactly who we work with to cover our own life insurance needs. Don’t let another day go by without being protected.