Starting a family is an exciting time. It is also a daunting one that can often lead to anxiety about what the future holds both during pregnancy and beyond. This is what leads to many parents-to-be to look into purchasing a life insurance policy.
Starting a life insurance policy during pregnancy is very much the same as doing so when you are not pregnant. The main difference is that your insurer will ask a number of specific questions so that they can tailor your life insurance to your immediate and future situation. In this article we'll take a look at life insurance policies in more detail, how they can protect your family and when to take out a policy.
Life insurance is one of the few things that grows in importance as the size of your family grows. Starting a family comes with a large list of new financial responsibilities in addition to emotional ones. From childcare costs to mortgage payments, a good life insurance policy will leave you safe in the knowledge that your family will have the means to cope financially should the worst happen.
If you fall pregnant and already have a life insurance policy in place, you might consider simply changing the terms of your existing policy to reflect your new life situation. This will usually involve your insurer asking you a series of questions and adjusting your premiums accordingly. You might also want to consider things like writing your policy in trust so that in the event of your death your money will be paid directly to your children when they reach an age specified by you. We'll cover this a little later in this article.
One of the main reasons families buy life insurance is income replacement, but how much do you need? A good rule of thumb is to multiply your annual salary by 10. For example, if your annual income is $70,000 a year, you should purchase $700,000 in life insurance.
Life insurance is important for stay-at-home-moms, too. Even if you are not earning a salary, research shows that the financial worth of a stay-at-home-mom is well over $100,000. This figure takes into account all the things a mom accomplishes during an average day: cook, cleaner, teacher, childminder, janitor, psychologist, nurse, garderner and the list goes on.
Ultimately, it is essential that you come to an amount of life insurance cover that you feel comfortable with both in the cover it provides and the cost of the premiums. Here are a few of the costs life insurance can cover for a family:
Outstanding debts including mortgage, loans and credit cards
Household requirements (cleaning, cooking and yard work)
While there might be many different life insurance products on the market, they generally accomplish the same thing; to provide money to your loved ones should you pass away while the policy is active.
Most people choose what is known as term life insurance. Term life policies pay out compensation to your family in the event of your death for a specific period of time. Policies generally run for periods of 10-30 years and can be a great comfort for people whose loved ones depend on them. Once the policy term expires, the policyholder can decide whether to renew their policy.
When considering life insurance it is important that both parents are covered either under the same policy or two separate policies. Even if one parent chooses to stay at home and the other goes to work, both contributions to the family are equally as important. For example, if a stay-at-home mom passed away, her partner would still need to cover childcare and household costs while they went out to work.
The best time to apply for life insurance (if you don't already have a life insurance policy) is during your first or second trimester. This is because it can be harder to get the right coverage the closer you get to full term. Conditions such as gestational diabetes and high blood pressure are quite common in pregnancy and it is important that you inform your insurer if you have been diagnosed with these conditions after taking out a policy. Failure to disclose conditions could result in not receiving compensation should the worst happen.
The sooner you apply for life insurance the sooner you will be covered against the unexpected situations that could throw your family into turmoil. A good policy will bring peace of mind and ensure that your family will be able to cope with the financial pressures that the death of a parent could bring.
If you choose to purchase your life insurance during pregnancy, you can always adjust your policy at a later date with another provider. Pregnancy itself comes with a number of health risks and you will usually find that once you have given birth and are free of these risks, your premiums will be reduced.
Shopping around the best life insurance policy can be a challenge, but a morning or afternoon spent researching the right product is time well spent. Once in place, your life insurance will ensure your growing family is protected financially today, tomorrow and well into the future.