Having a Baby? Add Life Insurance to Your Shopping List
By Kathleen Monday November 23, 2016 No Comments
Young families have a long list of purchases when expecting a new baby: the crib, the diapers, the clothes. But beyond the supplies needed for the next few years, life insurance planning should also be a priority when starting a family. Here’s why this type of financial product is so important for couples in their 20s and 30s with children.
What Exactly Is Life Insurance?
This insurance policy is designed to replace a breadwinner’s income so that the family can maintain its lifestyle in the event of a tragedy. Term policies provide a payout for periods of 10, 20, or 30 years, which makes them an ideal choice for financial protection as children grow up. Whole life policies are good for the length of the insured’s life and have a cash value that can be withdrawn or borrowed against.
Why Is Life Insurance Critical for Young Families?
Not only is raising children expensive, but the years between college graduation and empty nest are typically the years in which most couples build wealth and assets – a process which can be derailed by an unexpected tragedy. This is also the period when debts are usually at their peak, and mortgage and student loan payments don’t stop in the event of a death.
How Much Life Insurance Do Young Families Need?
Those opting for term life insurance should typically plan to replace the breadwinner’s income for several years, as well as cover outstanding debts and provide for children’s educations. During life insurance planning, the amount of the policy will largely depend on the individual couple’s salary, expenses, and lifestyle.
How Much Will It Cost?
Compared to the financial ruin that can occur without protection, the cost of a policy is negligible. For most healthy couples, a policy will cost between $50 and $100 per month. When life insurance planning when bringing home a new baby, it’s important to weigh the financial benefits against the current cost. When preparing for the future, working with a financial planner can help present individuals and families with available options, and make suggestions about what insurance plans best fit their needs.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
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