Life Insurance Primer for New Parents

You were young and you fell in love, you and your spouse. One of you went to work, or perhaps both. Making good money or even if it wasn’t so good, you didn’t figure you needed life insurance. Either you couldn’t afford it, or if you could, your spouse was quite capable of taking care of his or her self if something happened to you. Then, one day, something changed. No longer is it all about when you want to go out, when you want to get things, or spend all of your money for yourself. You have another life to care for. You buy a stroller, a crib, a dresser, clothes so tiny they look like they were made for insects. Among all of these changes, however, are you forgetting something very important?

Taking Care of Your Child

Now if something were to happen to you, it is no longer just a matter of your spouse being able to take care of themselves. They have to take care of themselves and the child you leave behind. That is not easy at all. If they are going to continue working, who is going to take care of this baby? If they were staying home, then your spouse is now going to have to go to work. Who is going to take care of the baby? Will the one income of your spouse be enough to provide for their needs? Will the child still be able to go to that college you were planning on when they grow up?

The answer to all of these is “YES” - if you have a proper life insurance policy in place.

Life Insurance Tips

• Do Shop Carefully For Insurance: Not all policies are the same, not all will give your surviving spouse and child the benefit they need should something happen to you.
• Designate Your spouse as a beneficiary AND at least one other beneficiary: It is a common mistake to name children as a beneficiary on a life insurance policy. This is typically not a good idea, even though you may be worried about something happening to you and your spouse together or if you’re a single parent. A child can not directly inherit that kind of money from his or her parents and the money will be placed in a state trust after a long probate, which can cause hardships for the child and the child’s new guardians. Designate someone you trust - or the person who would likely become the child’s guardian after your death. If you wish, you can designate a portion to pass directly to the child as a trust.
• Term Life or Whole Life?: Term life is most recommended for a young family, especially if you have plans and genuine potential for high earnings in life. Once you have achieved great wealth, life insurance is not really a necessity…a good will is.
• Insure BOTH yourself and your spouse: Even if one of you is not working, your services in the home are still of extraordinary value that will need to be replaced if something should happen to you - that costs money - money that a life insurance policy can provide.
• Consider a rider policy for the child: No one likes to consider or contemplate the idea that their child will die, but it happens every day regardless. Burial expenses can be extraordinary, and a small rider policy will not cost very much at all.

Life insurance doesn’t have to be a complicated affair, but out of love and concern for your family’s well-being. It should be a viewed as a necessity.