If you are expecting a child and are considering life insurance, the first thing I have to say is—smart move! But if this is your first time looking for coverage, you may have questions. Here are some typical ones I’ve heard over the years: 1. What type of life insurance coverage is best for new parents—term or permanent? Before figuring out what kind of coverage you need, you first have to understand how much death benefit you need to protect your family. You can do an easy calculation online to get a working idea of how much you may need with this Life Happens Life Insurance Needs Calculator. Then you can move on to what kind of coverage—term or permanent—meets your needs. An advantage of term life insurance is that it costs less than permanent, at least initially. This makes it affordable for young families that may not have a lot of disposable income, but have a large need for coverage. Permanent insurance provides both lifelong coverage and a cash accumulation feature, which can be a valuable source of money that you can tap into in the future. Often, the best solution can be a combination of term and permanent life insurance. The term policy can give you extra coverage during the years when the children are at home, with the permanent policy offering lifelong coverage. 2. Should you consider different types of coverage if you are working mom versus a stay-at-home mom? Both working and stay-at-home moms need protection because what they do for their families is so valuable. While a stay-at-home mom isn’t compensated for her work, if something were to happen to her, it would be expensive to replace all those things she does—from childcare to home care to ensure the family gets where they need to go when they have to be there. The difference between the two is that a working mother also contributes an income, which may be critical to the family financially. That means she needs to think about replacing that income when considering how much life insurance coverage she may need. 3. The company where I work offers life insurance, is that enough? Group insurance is a great benefit to have, but it’s limited in a number of ways. First, the coverage is often a lump sum, such as $50,000, or it may be one to two times your salary. That may sound like a lot of money, but my question to you is: Honestly, how long would that money last? And what would happen to your family financially after that was gone? Second, when you leave that job, you generally lose that coverage. If you don’t have an individual policy that you own, you’ll be leaving your family at risk. Think of how many times people change jobs, and you’ll quickly realize that group coverage, which is limited in scope and amount, is not a proper life insurance plan. Are there any restrictions I have to consider now that I’m pregnant? If it’s early in your pregnancy, and there are no medical complications, you should be able to get life insurance. If you’re farther along and there are medical issues, it may difficult to obtain. The life insurance company may want to wait until after your child is born. That’s why I advise those that are planning to have children to get the coverage as soon as possible. What can I expect to pay for life insurance? How much you pay for life insurance is based on a number of things but most importantly age and health. So, it depends on how old and how healthy you are! But here’s an example: A healthy 30-year-old woman could get $250,000 in life insurance coverage (for a 20-year level term policy for a nonsmoker) for about $13 a month. That’s certainly a lot of peace of mind for $13. And don’t forget about your spouse or partner. The two of you could get $500,000 of combined coverage (using the example of two 30-year-olds that each get a $250,000 20-year level term policy) for right around $26 a month. And my last piece of advice: talking with a life insurance agent at this stage can be very valuable. They can do a needs assessment and come up with the right type and amount of life insurance that works for your family budget. And what many people don’t realize is that an agent will sit down and offer this advice free of charge, with no strings attached. If you’d like help finding a life insurance professional, you can start here.
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