So, you and your spouse have decided to expand your family, yes?
You may be reconsidering a lot of things that you never gave a second thought to, like trading in your Dodge Charger for a minivan or evaluating your neighborhood’s public school system.
Life insurance is likely the furthest thing from your mind. But it shouldn’t be. In fact, life insurance should be one of the first things that you and your spouse nail down when it comes to your future children because it will have a significant long-term impact.
But why would anyone buy or adjust their life insurance to fit a child that doesn’t yet exist?
1) The calm before the storm: Babies are a blessing for any family, but these little miracles require your undivided attention, focus and loads of energy. It’s best for you and your spouse to figure out the right insurance policy and weigh your options before you become bogged down with a new set of priorities like diapers, play dates and college funds.
2) An asset within the asset: Speaking of college, the average cost for an in-state public university is around $23,000 a year, and private colleges cost around $45,000 annually. And those prices are slowly climbing. You’ll want to start putting money into a college fund as early as possible. Permanent life insurance acts like a savings account. Not only does this double as a college fund, but you can borrow against it and use the savings portion at a later time, tax-free. And unlike a 401(k) or a Roth IRA, your contribution is not capped, allowing you to add an unlimited amount of money to the savings portion of your plan.
3) Relief for your spouse: Before you start expanding your family, you can add your spouse as the beneficiary on your life insurance. This will guarantee that your spouse won’t need to worry about paying for your final arrangements in the case of your untimely death. Remember, the younger and healthier you are when you sign up, the lower your premiums. The average life expectancy is 79 years old, so signing up for a policy at age 30 will save you money, versus signing up for the same premium ten years from now.
4) Pay off major expenses: When you have kids, not only does your family expand, but so does the size of your purchases. Kids require you to buy a larger car and home, which means you need to bring home a bigger paycheck. In the event of your untimely death, who will help to pay your mortgage? If you live in a two-income home, how will your spouse make ends meet surviving on only one income?
5) The ace in the hole: In addition to benefits, many employers also offer life insurance to their employees. However, you should consider purchasing insurance outside of your job. If you are laid-off or fired, or if you become sick and cannot work, you will be dropped from your company policy. This will put your family in a tight spot. Also, most employment-based policies only cover your basic needs and may not provide the specific coverage that you desire.
If you’re considering starting a family, the time to start planning for life insurance is before your children are born, not after. Compare up to six life insurance rates, side-by-side, in just a few minutes, today!