After getting married, is it better to buy separate life insurance policies or to just get riders for my spouse and children?
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Asked October 29, 2012
Whether to get life insurance riders instead of individual policies will come down to your family's needs and financial ability. A whole life policy is the best type of policy for several reasons, and purchasing one for a child will be much less costly than if that child has to buy one when they are older.
Where money is concerned, adding riders to your existing life insurance policy is a less expensive way than to purchase separate policies. Your spouse and children will not have the same amount of coverage, but if they should pass away, there will be a payout to compensate for their loss. Be careful with this type of policy, however, as it may be written as a "last survivor" policy which wouldn't pay out at all until only one survivor remains under the coverage. You could even have a policy for yourself, one for your spouse, and then take out riders for the children when they are born.
Purchasing a whole life insurance policy is less expensive when you are young. If you bought a policy for a child, for instance, the rates would be much lower than for a grown man, and the child would have guaranteed coverage regardless of any medical conditions that developed later in life. Life insurance is important for everyone, and whole life insurance policies are the most stable.
By purchasing separate policies, you also make it possible for the policies to carry different beneficiaries, or be handled in different ways after the named insured passes away. If the whole family is covered under a single primary policy, then the named beneficiaries could only be changed and ultimately decided by the primary policy holder. As you can see, using riders instead of individual life insurance policies can limit your options severely.
Answered October 29, 2012 by Anonymous