Becoming a new parent can be both an extremely exciting and stressful time in life with many late nights and very little time to deal with the administrative and financial matters of day to day life.
Life insurance is unlikely to be the first thing that comes to your mind after having a child, but it could still be something very important for your family to consider. Raising children is expensive and if you or your partner died while you are still young – besides the emotional impact – life could become very difficult financially for your children and your family.
Read on to find out why life insurance for new parents can be so important and how you can get the best life insurance deal for your family.
Is life insurance for new parents important?
It might not seem like a top priority when you have a child, but having life insurance can be one of the ways you can help take care of your family financially.
When children are young, they need a lot of care and attention, which often comes with a lot of regular costs. It is during these times that having someone to look after the children at home and have a job and a regular income is so vital.
If you are raising a child with your partner, you can alternate work and stay at home between the two of you, or maybe one of you will work and the other will stay at home. Regardless, income is often important to help pay for the day-to-day costs of child care, and home care is just as important to ensuring the child is always taken care of. .
If either of you died, then practically it would take a toll on the surviving family. The death of the primary breadwinner could put more pressure on the partner caring for the child at home. They might need to start working and need the extra money to hire a nanny, and if the caregiver dies, the primary breadwinner may have to work less or quit their job to stay home. Having children can be very expensive, and life insurance is one way to have a safety net in place.
The cost of having children
There are several costs that may need to be covered in the event of the death of a parent or guardian of a child. This might not be something you want to think about, but it’s important to have a backup if the worst should happen to you or your partner.
• Mortgage or rent: If you have mortgage repayment obligations for the next few years and your combined salary (s) helped pay for this, then the death of a partner could put that at risk. Amid the emotional struggle of dealing with the loss of a loved one, it can be especially difficult to deal with the administration of the move afterward. Having adequate coverage in place would mean being able to keep your home and cover the costs.
• Debts: It might be obvious, but a lot of your loans and credit card bills won’t go away just because someone has passed away. They still have to be paid and it can be a horrendous experience for a loved one to have to work more to cover those bills when they also have to look after the children at home.
• Care expenses: It is not only the income of the primary caregiver that would be missed after death, but also the responsibilities of the primary caregiver at home. A death can force the primary breadwinner to stop working or pay more for additional child care, making it more difficult to keep track of daily expenses.
• Tuition fees: Tuition, uniform, books, and other education costs will all go up from time to time. It’s worth thinking about how long you would need to work to save enough money to send your child (s) to college. If this is a priority, you could purchase a life insurance policy whose payment would cover this cost if you died during those years of work. You can also arrange a payment to put regular income into a trust fund or savings account for your children.
• Daily fees: Simple things like clothes, diapers, food, gas and electricity bills, and various other overhead costs still need to be covered after a loved one has died.
If you’re not sure if you have life insurance, in any case, it may be worth it to budget all of your costs and see how much it would take to cover them all over the next few years if you or your partner died. If you want to buy life insurance, this will give you a better idea of how much insurance to buy.
Do my spouse and I need to take out joint life insurance?
Instead of buying two separate life insurance policies, a joint policy can usually be slightly cheaper.
However, there is only one payment and only one claim, so if you both die, your beneficiaries will only receive one payment.
With two unique policies, you would be covered twice as much, so it’s important to weigh how important each parent is to making money and caring for the child. Two individual policies may only cost a little more than a joint policy, so it’s worth comparing the two for your needs when shopping for life insurance. Read our guide on joint and separate life insurance to learn more about your options.
What life insurance is best for new parents?
There are several types of life insurance policies. Ultimately, it depends on your situation and how much you are willing to spend.
If you are a new parent looking for life insurance and have a mortgage to cover, you may want to take out life insurance. declining term life insurance contract. Decreasing term policies are designed to cover a payment that decreases over time, such as a mortgage. Over time, your monthly costs decrease, but so does your payment. However, the payment may not be large enough to cover other costs – it may be enough to pay off the mortgage.
With life insurance for new parents, it is important to have enough money to cover the costs that need to be taken care of and a little extra to help the children cope over the next few years. . A level term policy pays the same agreed amount and lasts for the length of time you choose. So if you thought it was crucial to protect your family for the next 20 years, then you would take a 20 year policy.