There’s no greater joy than becoming a parent for the first time. As your young family grows it’s important to begin planning for your financial future early. Though this may sound like an overwhelming task, it can actually be quite simple. We’ve compiled a three step process which will help you begin preparing early, so you can focus on this precious time with your little one(s).
Purchase Life Insurance
Purchasing life insurance for both parents is your first step. Even if one of you is a stay-at-home parent, it’s extremely important to invest in coverage for both of you. For many people it’s an obvious step to purchase insurance that protects the income of the main wage earner. However, the contribution of the stay at home parent is often overlooked because there are no financial transactions involved. But think about this: how much would it cost you to get full time childcare if the main caregiver passed away? It's actually very expensive! Though it is a difficult thought, imagine the great financial pressures you would face if you lost either contribution to your young family.
Life insurance is a fantastic method of financial planning for young families and a great way to protect your family from financial stress should one of you pass away unexpectedly. Many people leave enough money to pay off their mortgage balance and replace their income. It’s also common for people to leave additional cash to pay for college fees and other large future expenses.
As you compare life insurance products you will need to decide if you want permanent or term life coverage. Permanent life insurance products provide insurance for life, which means the policy is guaranteed to pay out as long as you pay the premiums and in many cases also builds a cash value. Term life insurance provides coverage at a guaranteed level premium for a fixed number of year (or term) such as 10 years. At the end of the guaranteed level premium term the premium costs may rise and sometimes significantly. For many young families term is the more affordable option. If you choose term, you have the opportunity to lock in low rates, based upon your current health levels. Be sure to select a term that will last through your significant financial obligations such as until your youngest child completes college or your mortgage is paid off.
Establish a Living Will or Trust
Having a living will or trust is extremely important. Establishing a written estate plan, while you’re of sound mind and health, will ensure that your wishes are effectively communicated. Your plan should include a clear definition of how you and your spouse would like personal and medical affairs handled. This is an essential financial planning step for families and by setting this in place now you can rest assured that your financial legacy will be handled correctly. It’s also a crucial step for leaving a plan in place for how your children will be cared for if both parents pass away.
Plan for Your Future
Having a long-term financial plan for you and your spouse is also in the best interest of your young family. Discuss your financial goals, retirement plans and begin saving and investing accordingly. Together you will be teaching your children the importance of financial responsibility and providing a sense of security. If you and your spouse are looking for an investment tool, permanenet life insurance may be a viable option. Permanent life products give you the opportunity to build tax-deferred savings, which can be drawn upon later in life.
Following these three easy steps, you can rest assured that your family is on the right financial path. So go ahead, your family with thank you for it!
Want tips and tricks on how to compare life insurance products? We encourage you to follow the IntelliQuote Life Insurance Blog where we will address the issues that affect you and your family. Ready to compare life insurance options? Request a life insurance quote today!