Life Insurance Tips for New Families
Becoming a parent is one of the most awesome and joyful milestones on the journey of life. And when you’ve got kiddos depending on you, you’d do everything possible to protect them, right? That’s where life insurance comes in. These tips can help you confidently and quickly get up to speed on life insurance, so you can take the next steps to give your growing family the financial security it deserves.
Get started sooner rather than later. The earlier you get life insurance, the more advantageous it can be for you and your family. That’s because the costs are based in part on your age. The sooner you act, the sooner you could take advantage of a lower rate. Find out more about when to get life insurance.
Understand your options. It helps to know the main types of life insurance and their advantages for young parents. Term life insurance has a lower initial cost, and remains in effect for a specific length of time at a set premium. Term life often is popular among young adults who want lower-costing coverage options to help pay off mortgages, loans or other debts should the unexpected happen.
Whole life insurance gives you protection for your whole life and has payments (aka premiums) that stay the same even if your health conditions change. Universal life insurance also offers lifelong coverage, but has flexible premiums you can adjust as your circumstances change. While whole and universal life policies typically cost more than term life insurance, they offer longer-term protection and can build cash value you can access during your lifetime. Sometimes, people purchase term life insurance and convert to whole life insurance later on. Read more about when to convert term to whole life insurance.
Know how much to get. Here’s a simple way to get an estimate of how much life insurance you may need: first, add up all your projected expenses, including debts, the mortgage or rent, monthly living expenses, childcare and future tuition costs when your kids get older. Then, subtract those expenses from the surviving breadwinner’s projected income and other financial assets (such as savings and investments). The difference between the two will give you a ballpark idea of how much life insurance to get. You can read more about how much life insurance to get, or try out our Life Insurance Needs Calculator to streamline the process — check it out!
Make sure you’re both covered. If you and your significant other are the household breadwinners, both of you should seriously consider getting life insurance. Even if you’re a stay-at-home parent, it’s super smart to get insured. If something were to happen to you, the costs of the at-home care you provide your family can be covered.
Name your beneficiary. Now that you have your coverage, you’ll have to name a beneficiary. What is a beneficiary? They’re the person (people or entity) who will receive the death benefit should you pass away. Usually, a spouse or children are named primary beneficiary, but to better understand your options, read more about choosing a beneficiary.
To fine-tune your life insurance plans, talk to an American Family Insurance agent. Get the life insurance coverage you need, the peace of mind you deserve, and special protection for the most important people in your life — your family.
Policy Form L-36 10, Policy Form L-36 20, Policy Form L-36 30, Policy Form ICC13-97 UL, Policy Form L-97 UL (AZ, ND, SD only)