Already a parent or expecting a child? Parenting is both a rewarding and chaotic experience. Your life will never be the same as a new parent, and neither will your insurance needs. Your life will cease to be about you. That little bundle of joy will become the center of your universe and will need protecting, not just now but until they’re on their own… or perhaps forever, at least in our hearts. An important type of protection your child will definitely need is financial protection. Experts tell us that part of any sound financial plan--- retirement savings and investments-- should also include life insurance. And it shouldn’t just be for new parents, but also for expectant parents, and experienced parents who may not have started to build that foundation for their family. Life insurance does just that, provides a safety net in case you’re no longer there to provide. You might already have a “starter” life insurance policy, or one provided by your employer, but believe me, your needs change tremendously once kids enter the picture. That basic coverage may no longer cut it for your new responsibilities.
Here are some things to consider and tips for why purchasing life insurance for new parents is important:
Life insurance for new parents offers two main categories: term and permanent, (a/k/a “cash value”) life insurance. Term life insurance provides coverage during a set period, from 5-30 years, and premiums remain level for that entire time. In other words, the rate you will pay today while you’re younger and healthy, remains the same until the policy expires say in 20-years. The difference between term vs. permanent life insurance is that the latter offers lifetime coverage... but at a price. The cost is significantly higher because permanent coverage acts as a savings account, building up cash value over time. But buying it now may be beyond your budget. Another smart move for young parents is to buy term insurance with a “conversion option.” That gives you the choice of converting it to a permanent policy later when you can afford it.
The Insurance Barometer Study is released each year by Life Happens and LIRMA. This study details what modern consumers are primary concerned with when it comes to their insurance, finances and coverage. The study states that It is estimated that it only takes 6 months for half of all U.S. households to feel the financial strain from the loss of a primary wage earner. More than one-third would feel the impact in a month or less, according to the study. Look at it this way: 1 in 3 households would have trouble paying living expenses if the main earner were deceased. According to the study the most at risk household are the age group the Millennials. These statistics paint a dire but realistic picture that could be averted with the windfall a life insurance payout would provide. To figure out how much life insurance is enough for your family; a rule of thumb is to buy 10 times your income and then add the cost of college expenses for each child.
If you are lucky enough to work for a company that offers a benefits package of a pension plan, health insurance, and employer-paid group life insurance you are in the minority these days. While this is a great benefit, the payout is often low, about twice your base salary, or whatever your employer determines for your coverage amount. This may be enough if you don’t have any assets or a family, but the employer-provided benefit will likely fall short if you have a spouse, a young child, a mortgage, and a college fund to consider. To that end, what happens if you leave or lose your job? Your employer-provided life insurance policy doesn’t follow you... no job, no plan. For this reason, an individually owned term life insurance policy is the best way to make sure that you can take care of your growing family if something should happen to you.
Shopping for life insurance for new parents can feel overwhelming and even a little terrifying. It can be intimidating, confusing, and make us feel mortal. No parent likes to think about the possibility of dying and leaving their children behind. But use fear as your motivator. Like I said earlier, you’re now responsible for a life other than your own. We all want to feel invincible, but the challenges of parenting and the fragile health of a child make us realize that tomorrow is not guaranteed to us. You need to be sure you can protect and care for your child and keep the promise you made to them. Life insurance for new parents is a real-life necessity.
If you are interested or in need of life insurance, make sure to check out: LifeQuote.com for all your life insurance needs.