Life Insurance for New Parents
While nobody wants to think about their own early demise, it's an important step to take to provide for your loved ones.
Finding the right life insurance and creating a will gives you the peace of mind knowing your family will be taken care of even if you're no longer around to provide for them.
However, choosing the right life insurance might be harder than it sounds. There are seemingly endless options in today's market – and this can be intimidating and frustrating for anybody who isn't familiar with these types of plans.
Writing a Will
Drafting a will can be equally challenging, especially if this is your first time. But don't worry, with the right information and know-how, you can set your family up for success no matter what happens in the future.
Let's take a look at some of the basics for both life insurance and creating a will, simplifying the process to make it as easy as possible for you and your family.
Amount of Coverage
The first question you should ask yourself before searching for life insurance is, “how much coverage do I need?”
The answer will be different for everybody, so you'll want to take a look at your personal circumstances in order to determine the amount that's right for your family.
Here are some questions you can ask yourself to help figure out how much insurance to purchase:
- How much is your current budget?
- How much debt do you have?
- Do you have any money saved up?
- How much income will you lose if either parent dies?
- Will your spending habits change if one parent dies?
- How much insurance will you need to cover the projected costs?
- How much will be covered by social security?
Take your time when answering these questions and do any calculations that are necessary to figure out the final amount.
Whatever the final amount of coverage needed is, add 10% to it just for good measure. Then, you can start searching for policies that match your needs.
Finding the Right Policy
Since there are so many different types of life insurance policies to choose from, it's easy to get confused when wading through your options.
Let's take a look at some of these differences and what they mean for people who are just starting their family.
Individual vs Group
The vast majority of new parents don't need to worry about spending hours researching the different kinds of life insurance because individual term life insurance is almost always the way to go – despite what the slick salespeople might try to tell you.
Unlike group insurance, individual life insurance allows you to choose whatever amount is right for your specific needs. Also, an individual policy isn't contingent on your employment status, giving you way more control over what does and doesn't happen to your policy and coverage.
Term vs Permanent
New families tend to choose term insurance over permanent policies because of the number of benefits and affordability offered by this type of plan. For starters, term insurance is much less costly than a permanent policy.
Other benefits include:
- The ability to end the policy once your children grow up
- The option to switch to permanent coverage if needed
- The flexibility to change components of your coverage at any time
Still, it's only smart to weigh all of your options before making any final decisions. Every family is unique and your life insurance policy should reflect those differences.
Writing a Legal Will
According to a 2015 study by Rocket Lawyer, two-thirds of Americans do not have a written will. While having a will isn't a necessity for every family, in most cases it's always good to have a plan for your assets in writing.
You can choose to draft a will by yourself or enlist the help of a lawyer. Either way, you'll want to consider the following:
- Montana state laws
- Possible beneficiaries
- Specific contingencies
- Guardian for minor children
All of these details are extremely important when writing your will, and the more specific you are – the more effective it will be should anything happen to you.
Key Takeaway
Starting a family is a pivotal time in someone's life. And it comes with a lot of new responsibilities such as finding the right life insurance and creating a will. Thankfully, you can simplify this process greatly while still ensuring your loved ones are fully protected and secure.
If you enjoyed this blog, take a look at some of our other related articles:
