Life Insurance for New Parents and Children

Major life events often mean changes in your life insurance needs. But nothing will change your estate planning like marriage or parenthood. Changing beneficiaries, higher life insurance needs, and more people relying on you for their security are just the tip of the iceberg. New parents, especially, need to take care when planning for their family's future. You want the confidence of knowing that no matter what happens, your children will be provided for.

Prior to your marriage, you may have had only enough life insurance to pay for your debts and your funeral expenses, or to care for your parents in their old age. Now, you need enough to carry your spouse through grieving, and to provide for him or her as he or she builds a new life. If you are the primary breadwinner of your family, your spouse may need education and re-training to re-enter the job market. Make sure that your life insurance is sufficient to cover these new needs.

 

Children increase your life insurance requirements even more. If you are the provider for your family, your life insurance will need to replace your salary at least for several years to provide for your spouse and your children. Even if you are not the primary source of income for the family, your spouse will need money to cover the cost of child care while he or she continues to work, or enough to stay home with your children while they are young.

Minor children cannot own property. If something were to happen to both yourself and your spouse, you would need a trust to hold your death benefits while your child is young. An estate planning expert can help you write a trust to provide for your child in this tragic situation.

A rule of thumb like "five to seven times your annual salary" sounds comforting, but it cannot take into account the details of your personal situation. Do you have elderly parents who depend on you? Do you and your spouse both work? Do you have older children who are nearing college age? Have you just purchased a home? Do you want your spouse to be able to stay home and raise your children if something should happen to you? Professional estate planning will help you to take all of these questions into account, and determine what amount of life insurance is right for you.

No tragedy strikes closer to a parent's heart than the death of a child. But life insurance for children is available, and it may be a good idea. Life insurance for your children can cover their funeral expenses, or be an investment in their future. And because children so rarely die, life insurance for a child is inexpensive, and coverage is easy to get.

 

Life insurance for your children can be an excellent investment. It's never easier to get life insurance than as a child. And once you have purchased the life insurance, your child will be able to maintain that coverage for the rest of his or her life. Some life insurance policies are written with an "Option to Purchase Additional Insurance" or "Guaranteed Increase Rider" (GIR), which gives you the right to buy more coverage at a certain interval or based on certain life events (marriage, birth of a child, etc.).

Coverage increases under a GIR do not require that the insured be re-certified for medical eligibility. Your child's health may get worse some years down the road, making it difficult or impossible to buy life insurance then. The insurance you purchased when your child was still young will continue to protect your child throughout his or her life, regardless of the state of your child's health.