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If you’re expecting parents eagerly awaiting the arrival of a newborn, you’re likely busy making important preparations. But amid the joy and anticipation, it’s important to take a moment to consider how this new life will impact your financial assets—like life insurance.
Understanding how having a child can change your insurance needs is a step toward securing your family’s future. We’re here to help you prepare and adapt, so that you can focus on welcoming your little one into the world.
Reassess Your Coverage Needs
The arrival of a newborn could significantly impact your life insurance needs. You may have coverage adequate for you and your partner’s needs, but introducing a family member adds new financial responsibilities. Consider future expenses of a child, like education, childcare, and daily living costs. A general rule of thumb is having a policy 10 to 12 times your annual income. However, with a child in the picture, you might want to adjust this figure to ensure their needs are fully covered, should anything happen to you.
Types of Policies to Consider
For new parents, term life insurance balances affordability and adequate coverage. It protects for a predetermined period, typically 20 to 30 years, aligning with key milestones in your child’s life, including college graduation. Though more expensive, whole life insurance offers lifelong coverage and can contribute to your child’s inheritance.
The Value of Insuring Both Parents
It’s a common misconception that only the primary breadwinner needs life insurance. The loss of a stay-at-home parent would also cause the family significant financial strain when considering replacing childcare and household management expenses. By insuring both parents, you’ll know that either surviving partner can provide for the child without overwhelming financial challenges.
Adjusting Existing Policies
If you already have life insurance, the arrival of your newborn is a critical moment to review and possibly adjust your policy. You might need to increase your coverage amount or extend your term to meet your family’s new needs better. Don’t hesitate to consult with your insurance provider to explore your options and make necessary adjustments.
Welcoming a newborn is a life-changing occasion—it’s one that calls for celebration and joy, but also for reassessing your family’s finances for the future.
Adjusting your life insurance cover will ensure that your expanding family is protected from the unexpected. Now’s the time to evaluate your coverage needs, consider the right type of policy, and ensure both parents are insured to provide a secure financial foundation for your new child.
Our team is here to assist you in your planning and discuss options to suit your growing family’s needs. Contact us at Suzuki & Associates here to get started.
