Family life insurance combines two things everyone loves: family and . . . insurance! Or maybe that second one’s just us. (We really do love insurance, though.)

But who doesn’t love their family? Part of loving your family well is protecting and providing for them no matter what. So, family life insurance sounds like a no-brainer, right?

Hold on, though—because sometimes a slick marketing slogan can fool even the savviest shopper into a dumb purchase. Especially when it’s aimed at your family feels.

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.

In a typical family policy, you choose one spouse to be the primary insured (the person getting the policy) and coverage for everyone else is through a policy add-on called a rider. That means the other spouse and kids are tacked on, have lower coverage caps, and aren't equal participants in the policy. That’s more expensive and complicated than it needs to be.

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Find the right policy for your situation at the right price.

Get Term Life

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In most cases, buying separate term life insurance policies for each adult is more flexible and cost effective. Here’s a side-by-side comparison to see why.

How Does Family Life Insurance Compare to Term Life Insurance?

Term life is far more affordable than whole life because whole life includes a cash value account sold as a retirement plan. But it ends up making you pay way higher premiums than you’d see in a term life policy.

For example, a 25-year-old guy shopping for $1 million in life insurance coverage would pay about eight times as much for whole life compared to a term policy over 20 years. On a monthly basis, that looks like about $29 a month for term life coverage, and $234 a month for whole life.

Since he’s shopping for family life insurance, getting separate term policies for himself and his wife would be about double that—but still way lower than a whole life package with riders.

We also prefer term life over whole life for flexibility. Here’s why:

• Term lets you choose how long you want to be covered, while whole life forces you to keep paying premiums forever or risk losing coverage.
• With whole life, you have no control over how the cash value gets invested—and the returns are historically very low! But if you keep life insurance separate from investing (which you should), you can put all the money you save on premiums into tax-advantaged retirement accounts and build major cash in the mutual funds you choose!

Whole life sucks compared to term life. Check out term life insurance prices specific to your situation! See your rates here.

So, what’s family life insurance all about? Let’s just say, we’re not fans. There are three main problems with the typical family life insurance package:

• The joint life problem
• The whole life problem
• The bait and switch

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.

Then there’s the issue of each spouse’s health. In a joint life policy, one unhealthy spouse can raise the cost for both. But by separating your policies, you can isolate the risk and pay less overall to insure yourself and your spouse.

We always recommend separate term life policies for each spouse. When you go that route, you can make each spouse’s policy fit their own health and 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.

• 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 when you die. It’s not an investment.
• 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.

Term vs. Whole Life

Like we said above, it’s common to pay eight times more for whole life compared to term life—and sometimes far higher! Check out our term versus whole life insurance comparison tool here and run some numbers on your own situation.

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.

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. Any discount will come from bundling your family life insurance with other coverage, like home insurance or auto insurance. Not because you got some “special” family life insurance deal.

The Child Rider

A child rider is an add-on to a basic policy that provides a death benefit to cover final expenses. While in most cases, kids don’t need life insurance, 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.)

Common Myths About Family Life Insurance

Who Should Get Family Life Insurance?

Family life insurance is a rip-off—just like whole life is. Never buy any form of whole life insurance. It’s much pricier than term life, and it’s mixed up with investments. Keep insurance and investments separate so each one can do its job better and cheaper.

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

But you can’t let the emotional marketing get to you. You can protect your family with term life insurance without getting sucked in to a terrible whole life family insurance policy.

What’s the Right Type of Life Insurance for Your Family?

Here’s the best setup for most families: a 15–20-year term life policy for each spouse, a child rider on one of those if you need it, and no investment component. That’s more flexible and affordable than family life, and you can invest the premium savings in tax-advantaged retirement accounts with better returns than you’ll ever see from whole life.

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). It’s very affordable—typically a flat fee around $20 per month.

When Might You Need Life Insurance Riders for Children?

If you don’t have a full emergency fund that can cover 3–6 months of living expenses yet, you can add a child rider on your (or your spouse’s) life insurance policy. It's really cheap, and one flat rate covers all of your kids.

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 to help cover a funeral if they die. 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 it is, whole life is often 8–10 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!

What Affects Your Cost?

Opt for term life insurance to get cheap coverage that only lasts as long as you need it (typically 15 or 20 years, the amount of time most people have dependents).

There are several factors that go into figuring your term life premium.

• Age
• Health
• Coverage amount
• Term length

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 $40 a month.
• Heather’s policy costs $30 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 $75 a month for the entire package. That means you’d save hundreds a month compared to a typical family life insurance scheme.

What could you do with the extra cash 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.

As we’ve been saying, family life insurance is 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 for 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.

Most people shopping for life insurance want it done fast, done right and done cheap. 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 when 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.