If you are a new parent, there is nothing more important than protecting your child. Life insurance is a way to make sure your children have the financial protection necessary if something were to happen to you or your spouse. In order for new parents to find the best life insurance, there are some things to keep in mind when buying a new policy.
Both parents should consider life insurance
Both parents should consider buying life insurance, not just the one who earns the bigger paycheck. Even stay at home parents should consider life insurance.
The parent who stays home is equally important to consider including because they care for the child and the spouse who survives would want to have the ability to pay to for this care. A life insurance policy could help the surviving spouse to have the ability to take some time off to be with the kids if necessary.
Think about how much money is sufficient to cover your kids’ future expenses
Life insurance will pay a specific dollar amount to a beneficiary when the person who holds the policy passes away. You choose the beneficiary when you purchase a new policy.
For example, let’s say you purchase a $500,000 policy and have your husband or wife as your beneficiary. If you pass away and the policy is still active, the spouse would receive the payout of $5,000,000. Think about how much money you will need that would help pay your home mortgage, your children’s college education, if you want your kids to go to private school or any other potential expenses.
Name a spouse or another adult as a beneficary
When you purchase a new life insurance policy, you want to choose your spouse or another adult who might care for your children as the beneficiary. You don’t want to leave the policy in the name of your younger children if you would like the benefit to go directly to them. If you name a beneficiary who happens to be a minor and you pass away, the life insurance provider will not pay you the benefit and will wait until a legal guardian is appointed by the court.
Term Life Insurance is ideal for new parents
There are basically two kinds of life insurance offered:
Term life insurance
A term life policy is also known as temporary life insurance because it has a specific time period. It really is the more affordable life insurance and there is a substantial amount of coverage at a reasonable price. You can choose a policy over a designated time period that can be anywhere form ten to forty years.
If you pass away within the period, the life insurance policy will pay the named beneficiary. The coverage will end when the period is over. However, if you are still alive when the period ends, the policy doesn’t pay you anything.
Permanent life insurance
A permanent life insurance policy will last your whole life and is on the more expensive end. It will pay out the beneficiary whenever you die.
For most families with young children, term life insurance should be enough to create a financial safety net if something were to occur. And most term policies can be converted into long term, permanent policies if necessary.
Final Thoughts to help new parents find the best life insurance
To sum up, when you think about what type of life insurance coverage you want as a new parent:
- Consider buying a policy which will cover the years that you are building up your equity and savings and include the costs of raising a child.
There are many reputable life insurance companies and if you get a few quotes and talk to some various providers, you should be able to find the best life insurance for you and your family.