Plan for a new baby with life insurance
May 09, 2012
Having a new child is an exciting time in life. Babble's Being Pregnant blog said planning for the child and family's financial future is key when starting out. Life insurance could be one way that parents start planning and creating a good financial future for their child.
"No one likes to think about their own mortality but, as parents, we have to confront the inevitability of death and set up mechanisms to care for our children even in our own absence," the blog said. "A life insurance policy and a will with guardianship provisions will make sure that your family is cared for even if you’re not there to do the caring."
The Being Pregnant blog said most people don't think about life insurance outside of an employer's plan, but a new child may be a good opportunity to start thinking about such things.
"But my work-based policy, like many basic employer plans, was only equal to a year’s salary, which would cover funeral expenses but not much else," the blog said. "The importance of life insurance is to replace the earnings of the deceased over the long term. This is especially critical if you have a single-earner family because the death of the earner would be a financial catastrophe. But even for a non-earning partner, there are financial concerns to consider. The cost to replace just the childcare provided by a stay-at-home parent is not inconsequential."
Determining how much coverage is needed should be determined through a conversation between the parents and a financial planner, as every situation is different and every parent may need something else for their child. The costs of college, funeral expenses and other bills could be accounted into the policy depending on what the parents are looking for.
After purchasing a new life insurance policy with a newborn child in mind, parents should be sure to evaluate and reevaluate the policy at least once a year to make sure the policy continues to meet current needs.