So, you’re planning on adding a little one to your family. Congratulations! Whether you and your spouse are expecting or you’re looking to adopt, this is a very exciting time for any household. It’s also a very hectic time that requires a lot of planning, involving everything from setting up a nursery to factoring in added expenses and child care. Another important consideration is how this new addition to your family will affect your life insurance—because it certainly will.
As a general rule of thumb, it’s recommended that you update your life insurance or check in with your agent or life insurance carrier after any “major life change”, which typically refers to changes to your family, your finances, or your health. A new child could mean changes to all three, which makes it even more important that you update your insurance before the big day.
Can I Just Wait Until My Child is Born?
Expecting a child is a very busy time, and you might think it would be easier to take care of the life insurance changes later, once the child is here and everything has calmed down a bit. After all, you have time, right? Yes, and no.
Generally speaking, it’s best to get life insurance as soon as you possibly can. Your rate will be lower the younger and healthier you are, and you likely won’t get any younger or healthier than you are right at this moment. Taking care of your life insurance now, especially if you currently don’t have a policy, will be easier on your finances in the long run.
Think about your plans for the future. Will you or your spouse be leaving your job or staying at home to care for the child? In that case, it is definitely wise to get a life insurance policy that can act as income replacement if the working parent were to pass away unexpectedly. Your policy doesn’t have to stay the same forever; you can increase the amount of coverage later on if you choose to have more children or keep one parent permanently at home, but you definitely should have some coverage now.
But the working parent isn’t the only one who needs coverage. If the stay-at-home parent is the one who passes away, having life insurance can provide an additional financial benefit to the working parent. They can use this benefit to afford childcare, or to take some time away from work to help the family regroup.
Important Things to Discuss With Your Insurer
Once you’ve determined that you’re ready to talk life insurance, there are quite a few things that you’ll want to take care of. Here are some of the talking points that you should bring to your appointment:
- The type of coverage. Term life and whole life insurance both have their benefits. If you are a younger couple who is still building their legacy, a term life insurance will provide temporary, low-cost coverage until you are more established. If you and your spouse are financially secure, whole life insurance will provide coverage for the remainder of your lives. A blend of term and whole life may be the best solution. Let your agent recommend the best form of coverage for you and your lifestyle.
- Whether both parents will be working. As mentioned above, this will be crucial to determining how much income replacement will be necessary, as well as what other impacts an unexpected death will have on your household.
- Group life insurance. If one or both parents are working, you might have some coverage through your employers. This is great supplemental coverage, but it should not be your only coverage. If you leave this job in the future, your coverage will cease, and your current coverage may not provide enough for income replacement and other financial concerns.
- Financial obligations, now and in the future. Don’t just think about current income replacement. Will your child be attending college in the future? Do you have any debts? What other costs will you incur while raising a child? Will you be having more children? These questions will help you to determine the right amount of coverage for you.
- The beneficiary. You can use your life insurance policy to build a financial nest egg for your child, but do not name a minor child as your beneficiary. Life insurers legally cannot pay a death benefit directly to a minor. If you would like the death benefit to go towards your child before they are 18, be sure to set up a trust, name an adult custodian, or name a trusted adult as your beneficiary.
This may sound confusing, but it will all be worth it when you and your family are secure and you know your child will be protected in the event of any unforeseen circumstances. If you still have questions, contact a life insurer today! An agent would be happy to work through these questions with you and help you find the right coverage for your family.
About National Catholic Society of Foresters
At National Catholic Society of Foresters, we pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. Sales from our financial services products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. Our portfolio is extensive, ranging from various life insurance policies to IRA’s to support your financial needs no matter what stage of life you’re in. For more information, contact our friendly experts today at (855) 804-7424.