Life as a new parent is exciting, but all of the responsibilities and changes can cause some anxiety for the proud new parents. There is an immense responsibility to take care of the young new life, and part of your planning should include a life insurance policy. This is a way to provide for your child financially if you were to unexpectedly pass away. There are several options for insurance, and the best choice offers full protection for your child.
Why Is Life Insurance Important for New Parents?
Life insurance is financial support for the beneficiary of the policy when the policy holder dies. As an insured person, your policy can be used to provide support for your partner or spouse and children after you are gone. The money can be used for basic living expenses, like a mortgage, education, groceries or medical bills. A policy also help with the costs of your funeral and burial.
There are concerns when shopping for a policy, as there are different types that could impact the value of your policy. A term life policy is very affordable and gives quite a bit of coverage for the cost. The downside of this policy is that can only be taken out for a specific period time or term. These can range from 10 years or several decades. A permanent life policy could be:
- Whole life
- Variable universal life
- Universal life
- Indexed universal life
A permanent policy is more costly but has the added benefit of paying out regardless of when you die. It can also build up cash value that can be used to help fund certain expenses later on as the family grows.
How Much Life Insurance Should New Parents Have?
The goal of life insurance is to make sure the family can carry on in your absence without a severe lifestyle change or substantial financial difficulty. Given the two types of policy options, the amount of life insurance to choose depends heavily on which kind of policy that’s chosen and the dynamics of your family. New parents shouldn’t limit their options to coverage for one parent over the other, as families need to cover more than just the breadwinner. The surviving parent has a lot of adjusting to do after the passing of their loved one, potentially needing to take several months off work.
The amount of insurance to take out depends on the financial needs the family will have if either parent dies. Figure out the years of income that should be replaced, add in debts or other planned expenses and factor in what kind of savings or other life coverages are already in place.
A life insurance policy is an important investment once you have children. Look at the pros and cons of a term vs permanent policy and choose a coverage amount that would leave your family on firm financial ground.
About Provident Protection Plus
At Provident Protection Plus, we have served the businesses and residents of New Jersey, New York, and Pennsylvania for more than 60 years. We are a wholly-owned subsidiary of Provident Bank, the region’s premier banking institution, and we are prepared to offer you personal, business, employee benefits, and risk management solutions. To learn more about our coverage options, contact our specialists today at (888) 990-0526.