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Tips to Not Leave Your Family Financially Stranded


Last holiday season, I noticed a sad trend of posts popping up on my social media feeds: crowdfunding to help families who recently lost a loved one pay for the funeral.

One post was for an IndieGoGo campaign for a former teacher of mine, who left behind two kids and a stay-at-home wife.  Another was for a former classmate who had passed away suddenly in a car accident; as a single parent, she left her retired parents with the cost of not only her funeral but also the responsibility of raising her young son.

Not only were these families devastated at their loss, and trying to find a new normal in their lives, they were also tasked with funding a funeral or ceremony, which costs thousands of dollars, on average.

The topic of life insurance [1] is something that can be hard for people to confront, because it assumes that you will at some point pass away, and the notion of death can be scary. But there is a hopeful side, a responsible side that ensures you and your family will be taken care of if the worst happens.

And it’s important that people act now rather than later.

How to Protect Your Family With Affordable Life Insurance

Life insurance shouldn’t be confused with healthcare, because no one is guaranteed a policy, especially not if — and this may sound crude, but it’s the nature of the business — that person is more likely to pass away than someone else. Life insurance companies make money by betting on you outliving your policy. This way, they keep the money you’ve been paying them over time, but they never have to payout what your beneficiaries are entitled to, per the policy.

This is why a whole or permanent life insurance policy will cost more than a term life insurance policy [2], and why younger people are cheaper to insure than an older person, a sick person, or a person who works in a risky industry or who has risky hobbies (i.e. skydiving). For these reasons, some life insurance companies will require a medical examination before you are insurable with them.

However, there are other kinds of life insurance that will help secure your family in your absence, and they may also cost less as well.

Final expense insurance is a great option if you are a single, or married with no kids and whose spouse could be financially secure in your absence. For example, if one parent stays at home to care for their children, and the other is the breadwinner, then this might be a good option for the homemaker in the family. It will cover final expenses, which brings the monthly cost down, Many online quotes put this insurance at around $14/month. One caveat to this: factor in any new bills that would be incurred in the homemaker’s absence, like childcare. This is the process you should use when choosing any kind of life insurance type and amount. Consider not only the funeral costs, but how much the family financially depends on you.