If you and your spouse are expecting a baby in the next few months, you have probably spent some time preparing for the arrival of your bundle of joy. Aside from stocking up on diapers, decorating the nursery, and planning your work-related parental leave, there is one thing that you may not think is necessary that needs to be added to your to-do list: getting life insurance.
By purchasing a life insurance policy for each parent, you are ensuring a financial future for your family. In the event that you or your spouse dies, the benefits from the life insurance policy could potentially help to replace that parent's income, cover living expenses, pay off debts, and/or pay for the child's future college expenses. Here is what you need to consider when you are choosing a life insurance policy in this situation.
How Much Life Insurance Is Needed?
The needs of each family are unique, and they can't necessarily be determined by using a formula like eight to 10 times your family's yearly income. However, you can use the following questions to help you get a baseline idea of how much insurance you need.
- If you were to pass away, would you want the life insurance to help pay off the mortgage so your surviving spouse wouldn't have to concern themselves with housing expenses?
- Aside from a mortgage, what other types of debts (lines of credit, car loans, etc.) could a life insurance policy assist in paying off to make your family's overall living situation more financially secure if you died?
- If you were to pass away, could your life insurance benefits be used to cover your child's future college expenses?
- Would life insurance be necessary to cover all of your family's living expenses if you passed away, or would your surviving spouse be able to work to help cover some of the costs?
How Long Will Life Insurance Be Needed?
To determine how long you will need to purchase a life insurance policy for, a number of factors should be considered. Two things that are most important when determining the length of your policy include your family's current financial situation and the type of policy that you require.
For example, if you are interested in a policy for a certain period of time, such as until your baby goes to college or until your 25-year mortgage is paid in full, then you may want to purchase a term life insurance policy. However, if you want a life insurance policy that will protect you until the day that you die, as long as you pay your premiums in full and on time, then you should opt for a permanent life insurance policy.
In the end, you will want to talk to a life insurance professional to help you determine the amount of life insurance you need and how long you will need life insurance coverage.
To learn more, visit websites such as https://www.windfallinsurance.com.