This year, numerous women will welcome their first child into the world, possibly including you. If you are expecting, your days may be filled with a blend of excitement and anticipation. While you might be preparing your home and nursery, it is important to consider a fundamental purchase for your child's future: life insurance.
There are several compelling reasons to consider purchasing a life insurance policy prior to giving birth.
Firstly, consider the significant value you contribute to the household. What would be the ramifications if you were no longer available to provide support for your child? For instance, if your partner is a stay-at-home parent, would they be able to maintain the household without your income? They might need to find additional employment to compensate for the loss, or potentially leave their job to manage the upbringing of your young child.
In the event of the passing of a stay-at-home parent, the financial impact can be substantial. Would your partner be financially equipped to compensate for your contributions as both a caregiver and household manager? To illustrate the significance of these contributions, the loss of a stay-at-home parent is estimated to cost an average of $178,201 annually.
Life insurance is primarily categorized into two types: whole life and term life.
Term life insurance is a practical and cost-effective coverage option for the majority of families. These policies offer protection for a specified duration at a consistent monthly premium. It is generally advisable to consider a policy that extends coverage for your child until they achieve financial independence.
Consider whole life insurance if you are approaching retirement age and seek the assurance of a guaranteed death benefit for your child, or if you are engaged in estate planning and intend to transfer assets to the next generation.
To calculate the amount of coverage you need, add up all of your current assets and subtract your debts and likely future expenses. Not sure if you calculated correctly? Try our coverage calculator on "How mcuh life insurance do I need?"
As your child grows, so will the expenses they bring. It can cost more than $233,000 to raise a child to the age of 17, not including the cost of their college education and living expenses. It’s also becoming more common for adult children to live with their parents into their early twenties as they establish themselves. Their financial needs (student loans, rent, and living expenses) should be taken into consideration when you’re thinking about how much coverage you need.