subject: Life Insurance Tips For New Parents [print this page] Congratulations on your first child! You have just crossed over into a new dimension in your life, an expansion of your family that will redefine everything youve known and expected, and a new direction that will test and prove your love, patience and hope for your family. As youre getting ready to herald a new life into your own, this is a time full of anticipation, nervous excitement and concern. Take your time to enjoy these moments, but remember to make certain key financial decisions, such as purchasing life insurance, as soon as time permits. Youll be surprised at the peace of mind it can leave you with just to know that your new family wont have to struggle much if anything happened to you. Here are some tips to help you get started:
1. Inventory stock
Take a look at what you already have in place. For some couples, this may have been group coverage purchased through the workplace. For others, it may be no life insurance so far, or none on a stay-at-home spouse who will be taking care of the baby. Find out what you have, and how much it covered based on your old needs.
1. Calculate new needs
With a child, your needs will drastically change. You will need to beef up insurance cover if your policy was not large enough to account for expansion of your family. You may also need to focus on details such as the type of insurance you will need. Most middle class families that buy term life insurance save their money in retirement and investment accounts. Higher income families that usually opt for whole life insurance do so because they prefer safe tax-deferred vehicles to shield their money in.
2. Find gaps
See where your current life insurance inventory meets your new, growing needs. Do you spot gaps in supply and demand that can seriously affect your loved ones? Rectify these immediately, especially since you dont want to leave your new born child and grieving spouse with severe monetary hardships as well.
3. Ride on riders
Riders are good ways to make quick yet easy changes to an already existing policy and include your child and even spouse on it. They may cost a little extra on yearly premiums, but they can function as great temporary solutions while you arrange for additional life insurance protection.
4. What to include in the increase
You would likely want your spouse and child to have a home completely or largely paid for in order to live in if something happened to you. Add the mortgage to your calculations. Childcare costs are no joke, especially in a childs formative years. Break this down age-wise if necessary. Factor in education if you would like to leave your child behind with an all-expense-paid college experience. Some parents dont like this option as it may turn their children into spoiled brats. The choice on whether or not to pamper them depends not only on how soft you want to be, but also on how much you can really afford.
5. Buy early
The sooner you buy, the more likely you are to qualify for better rates, based on your age. Having a new baby can seem overwhelming, but take some time out to get a life insurance policy soon to lock in better rates.
6. Child life insurance
Some people hate child life insurance because they believe that people who do not bring in any income should not carry any life insurance. Others swear by it because when they had it on themselves as children, it worked out in their favor as a mini savings bank for college tuition or prevented future insurability for those who developed chronic conditions or diseases in adolescence or adulthood. What you choose will depend on which school of thought you prescribe to, but you should remember that life insurance proceeds for children are typically very small, rarely exceeding more than $30K. With funeral costs rising rapidly, consider at least a child rider with the option of convertibility to a larger permanent life policy when they come of age to protect against insurability.
7. Stay-at-home spouse insurance
Some stay-at-home spouses believe that they do not need life insurance, or only need a nominal amount that will cover funeral costs. Think again. As a stay-at-home spouse, numerous studies have proven that your contribution to the household is manifold than you think. According to Linsey Knerl on msnbc.com, the true value of a stay-at-home mom is equivalent to about $30,000 per year.1
8. Naming children as beneficiaries
Remember that no minor can withdraw benefits from life insurance proceeds on their own. You would have to name an adult who can take care of your childs needs if you were not around. This would include finding someone you trust to step in should you and your spouse both pass away. Create an ILIT and will as well to manage your death benefit if it is a considerable sum of money and you would like checks and balances in place to prevent it from being misused. Consult your lawyer for the best advice on what to do and how to do it.
If youre thinking of buying additional life insurance to account for your new family status, comparelife insurance rates before buying. Youll be surprised at how much you could save. And when youre ready to buy your policy and are looking for a way to save, choose an online aggregator website that hosts policies from multiple rated carriers. You could save up to 70% on your life insurance quote today.
by: Pat Cassidy
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