Aflac: A New Parent’s Guide to Term Life Insurance Policies

Parenthood brings plenty of new financial obligations. New parents may now have additional expenses and new financial goals to aim for, including protecting their young family. Term life insurance can offer an enhanced way to help create financial security and added peace of mind. Its comparable premiums, death benefits, and customizability can help parents fit a large amount of coverage into their budgets. This article will explain how term life insurance works and cover its benefits for new parents, along with some alternatives so parents know all their options.

How does term life insurance work?

A term life insurance is a temporary type of life insurance policy. This policy typically covers the policyholder for a 10, 20, or 30-year term, depending on the policyholder’s choice. Once the policy expires, the policyholder may decide to renew their coverage or get a new policy.

Benefits of term life insurance for new parents

Term life insurance can help new parents thanks to several features:

1. Larger death benefits

Term life insurance can offer coverage amounts that could be available up to several million dollars This not only offers applicants a substantial amount of coverage but also plenty of choice. Applicants who need less coverage can get a death benefit closer to the bottom end of the range. Meanwhile, families with higher incomes or more substantial financial obligations  may be able to apply for up to millions of dollars.

2. Comparable premiums

Term life insurance offers comparable rates for the high death benefit discussed earlier. This may make it possible for to apply for a life insurance policy for parents needing more coverage on a smaller budget. Plus, shopping around for term life insurance quotes can help parents find lower rates on coverage to save more.

3. Simplicity

Given the additional responsibilities — financial and otherwise — they have to manage, new parents may prefer a simpler policy. Term life insurance doesn’t have cash value or other complex terms, unlike permanent life insurance. Although this means one can’t use term life insurance to help build wealth, it also means the policyholder may not need to know about or manage as many aspects of a policy.

4. Customizable coverage

Despite term life insurance’s simplicity, it still offers customizability thanks to varying policy types. For example, convertible term life insurance lets the policyholder turn their term life insurance policy into a permanent life insurance policy — offering lifelong coverage and cash value — at any time during the policy term with no new medical exam. This policy type can help new families fit life insurance into their budgets and then turn it into permanent life insurance as their incomes and obligations grow.Another example is increasing term life insurance. This policy grows its death benefit yearly to offset increasing costs. It may work for new families who only need to cover children until they reach adulthood but want to guard against inflation.

Alternatives to term life insurance for new parents

Term life insurance can help many, but its limited term length and lack of financial features may not suit all families. Here are some term life insurance alternatives for new parents:

• Whole life insurance: This policy offers lifelong coverage and cash value that grows with each payment and earns fixed, tax-deferred interest. Policyholders can withdraw from or borrow against cash value and receive the full amount minus surrender charges if they surrender the policy.
• Universal life insurance: This has the same features as whole life insurance, but policyholders can adjust premiums and death benefits as well. They can also pay premiums with cash value once it grows enough. The flexibility can help new parents who are reestablishing their financial footing.
• Variable life insurance: Variable life insurance offers the same features as universal life insurance but also lets policyholders invest their cash values in funds that hold stocks, bonds, and other assets. This offers more potential for growth but also a higher level of risk. Parents who feel confident in their investing choices may benefit from a variable life insurance policy.

The bottom line

Having a child is one of life’s great joys, but it also brings new stress and challenges. A term life insurance policy offers a simpler, customizable way to help protect one’s family at a lower cost. However, new parents should keep the term limit in mind. Term life insurance could best serve parents who wish to protect their child until adulthood since the policy would expire at that point. Parents who want lifelong coverage and cash value for other goals may prefer a permanent life insurance policy. Regardless, shopping around can help parents find the most budget-friendly rates for the coverage they need.

Aflac recommends speaking to a tax advisor concerning tax benefits to point you toward your goals.

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.

Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.

Aflac life plans – A68000 series: Term Life Policies: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68200, A68300 & A68400. In New York, Policies NY68200, NY68300 and NY68400. Whole Life Policies: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368100. In Delaware, Policy A68100. In New York, Policy NYR68100. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Not available in Delaware. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.

Receipt of accelerated death benefits may affect eligibility for public assistance programs. Benefits may also be taxable, and are not expected to receive the same favorable tax treatment as other types of accelerated death benefits that may be available.

Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (NAIC 92908).

In AR, DE, ID, OK and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Aflac Final Expense policies are not available in New York.

Aflac does not offer Universal or Variable Universal life insurance.

Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY, VA or VT. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.

Aflac WWHQ | Tier One | 1932 Wynnton Road | Columbus, GA 31999

Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211

Continental American Insurance Company | Columbia, SC

Z2500162                                                                                                              Exp. 4/26

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Senior PR & Corporate Communications
Contact: Angie Blackmar, 706-392-2097 or [email protected]