4 Life Insurance Questions Answered For Expecting Parents
If you’re expecting a child or making plans to expand your family in the near future, life insurance should top your priority list. While the nursery décor and bottle brands may be more fun to shop for, your growing family depends on you to secure their financial future. Whether you’re shopping for life insurance for the first time or want to review your policy to ensure you’re putting your family in a safe position, here are the answers to a few questions that may be crossing your mind.
What’s The Best Life Insurance For New Parents?
Before you decide on the type of life insurance policy, determine the death benefit amount you’ll need. Your debt, income, and future goals for your children will all come in to play, but you’ll likely need five to 10 times your yearly salary (aim for the higher end if college is in the future for your little one). After determining your desired benefit amount, decide on the kind of coverage you need.
Term life insurance: This policy is set for a specific time period. If you die within the coverage time, your beneficiaries receive the payout. It can be converted to permanent coverage and is the most affordable policy for younger families.
Whole life insurance: This is a permanent policy that covers you for your entire lifetime. Premiums are more expensive but they don’t increase as you age – which may ultimately save you money. Whole life allows you to build cash value over time on a tax-free status.
Universal life insurance: This policy is designed to last a lifetime. It can be changed over the years – allowing you to customize your premium and coverage amount.
Should A Stay-At-Home Parent Have Life Insurance?
Yes. Unequivocally, yes. The idea that a stay-at-home parent doesn’t contribute financially to the family is more than out-of-date, it could be detrimental to your family’s financial planning. If the parent who takes care of the kids were to pass, the remaining partner must pay for that childcare. The average monthly child care cost in the U.S. is $972 – per child. Use the average U.S. salary – $40,000 – to calculate life insurance coverage for a stay-at-home parent. Multiply that salary by five or more years to determine death benefit amount.
Is Life Insurance Through My Work Enough?
You should absolutely take advantage of group insurance through your employer, but it’s likely not enough. Many companies offer a lump sum or one to two times your salary as the death benefit. While that may seem like a lot of cash, when you consider the cost of raising a child, maintaining your home, paying off debt, or saving for college, it’s evident you’ll need a supplemental policy.
How Much Does Life Insurance Cost?
The cost of life insurance depends heavily on your health and age. Coverage is cheapest when you’re young, so it’s better to purchase your policy sooner rather than later. Life insurance is much less expensive than most people think. For a healthy 30-something, a term life policy worth $250,000 can be as low as $15 a month.
Work with an experienced life insurance agent who can determine your needs as your family grows. A good agent will offer different policies within your budget that allow you to plan for the future and, when you welcome your new child into the world, you’ll never have to worry about their financial security.
