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.