Becoming a new parent is an amazing experience, most often bringing joy but also a certain amount of fear and trepidation due to the awesome responsibilities that go along with creating your new family. One thing’s for sure – if you haven’t taken care of your life insurance needs until now, becoming a new parent may be just the impetus you need to get you to take care of this important obligation.
With this new, completely vulnerable person now totally dependent upon you for his or her well being, securing a means to provide for them in the event that you’re taken away prematurely deserves some serious consideration. Here are a few things you may need to know:
- Buying a life insurance policy will never be more affordable than right now. As time passes, the cost will only increase.
- You can buy temporary, or term insurance or permanent, whole life insurance. Term insurance provides the greatest death benefit for the least cost. Whole life is more expensive but can cover you for your lifetime and carries with it a cash accumulation benefit.
- A term policy is sufficient for most families unless you have a dependent who will require a lifetime of financial support (such as a special needs child). Term policies are put in place for a specific period of time, or term. That may be 10 years, 20 years, 30 years, etc. The term you choose should extend, ideally, until the kids are out of the house and living on their own.
- If one of the parents is a stay-at-home child-care provider, don’t assume that person doesn’t need to be covered because he or she doesn’t bring home a paycheck. The cost to hire someone to fulfill the duties of a stay-at-home parent is significant and should be considered when formulating your insurance strategy.
- Be sure to buy enough life insurance to provide an adequate standard of living for your family for the amount of time they would otherwise be dependent upon your income. You can consult your trusted life insurance broker to help arrive at a workable figure, which should amount to your current income times the number of years until your children will no longer be dependent on your financial support. Add about $100,000 per child for college expenses and make sure to include a sufficient amount to pay off current debts and your final burial costs.