With your newborn baby in arms, it’s important to think about life insurance.
Few personal milestones compel somebody to buy life insurance coverage like becoming a parent. Growing a family means that your priorities change, and your life becomes significantly more valuable – to everyone around you. While it might be the furthest thing from your mind, life insurance is critical to have and maintain as a new parent.
Life insurance is designed to help your family when you are no longer around to do so. In the event of your death, life insurance helps your family to financially recover so that they can grieve, maintain goals as planned, and pay off your remaining debts.
Here are five tips for new parents looking to buy life insurance:
Learn insurance options
Life insurance policies can vary widely, but they generally fall into two categories: Term insurance and permanent insurance, which is often referred to as whole life or universal insurance. Term life insurance is set for a period of time, commonly 10 or 20 years, while whole life insurance covers insured individuals as long as they live. Both come with many benefits, so it’s important to talk it over with your insurance agent first.
Determine coverage priorities
Generally, an insurance agent will help you determine an appropriate coverage amount for the policy by examining some of the key costs your family will have in years to come, such as the cost of child care, education, and the mortgage. You can also figure out how much income you’re expected to earn over your lifetime, and what aid your family will need if you were to pass suddenly.
Buy a policy early
The cost of life insurance doesn’t hinge on your credit rating, savings, or assets. It’s determined by your age and the results of a medical evaluation that’s required every time you seek coverage. In essence, the healthier and younger you are, the less in premiums you’ll need to pay. It’s better to lock in low rates while you’re young rather than risking it when you’re older and will likely pay a lot more in premiums.
Consider insuring both parents
It’s common for both parents to work and contribute to household expenses and the costs of caring for their children. But even in cases where one parent quits work to care for a young child, that parent should be insured. If the stay-at-home parent were to die, the living parent would have to pay for childcare and housekeeping costs. Life insurance can help with that.