Best Life Insurance for New Parents
Becoming a new parent comes with many new responsibilities. Besides dealing with the emotional seesaw, the stress, the lifestyle changes, and the exhaustion of trying to provide a safe and healthy environment, many parents realize how important it is to consider the role life insurance plays in the future of their family by providing a financial safety net.
The need for life insurance for new parents grows significantly with the latest addition to the family. Now with children in the picture, the financial implications of a parent dying without life insurance or not enough life insurance protection can be viewed as devastating.
Life insurance provides that financial safety net that pays the mortgage, child care, medical costs educational costs, loans, and all the other costs involved in raising a child. Purchasing life insurance provides you with peace of mind. You do not want to worry about what would happen to your family in the event of your absence.
Choosing the Best Life Insurance for New Parents, Consider These Facts!
Raising a Child to Age 17 Costs $377,040!
U. S families spend $377,040 to raise a child to age 17. That’s $122,178 per year! But 11 million households with children under 18 have no life insurance. Parents: If you pass away without life insurance, could your family afford to raise your child? If the answer is “no,” you need life insurance.
Costs associated with raising a child include:
1. Housing – $126,180
2. Child care/education – $84,870
3. Food – $45,930
4. Health care/clothing – $39,840
5. Transportation – $45,090
6. Miscellaneous – $35,130
Should life Insurance be Purchased For Both parents?
Many times, parents will only purchase life insurance coverage on the parent providing the income for the family, known as the “breadwinner,” and not cover the parent staying at home and raising the child. However, stay-at-home parents have a value that extends beyond what is involved in raising a child and should have life insurance coverage.
If finances are tight, covering the “breadwinner” is an option to reduce the premium. However, consider what would happen if the breadwinner of the family had to give up work and take care of the child full time or part-time. Should you also consider purchasing a children’s policy?
The least expensive life insurance for new parents is term life insurance. And purchasing two individual policies is a better choice than a joint policy that covers both parents on one policy and is not much more expensive. Both parents control their policies, including beneficiaries.
How Much Insurance Do I Need?
Consider how the mortgage, which is a significant expense for the household, would be paid in your absence. Having a lump sum can make the difference between having to put the home up for sale or being able to stay in the family home. A mortgage insurance policy specifically designed to cover the mortgage loan is an excellent option here. This type of policy comes with many optional benefits to help financially in times of crisis.
Then what about the costs of your child’s current and future education if they plan on attending a college or trade school. You will need to consider the expensive cost of childcare if your partner if you are not here and how much you have on existing credit cards and loans. If you want your family to maintain its current lifestyle, there are many things to take into consideration.
How much insurance do you need? Probably more than you think. A general rule of thumb is to buy ten to twelve times your income in life insurance coverage. The small group policy most people have at work, based on their annual income, is not enough coverage. Keep in mind that if you lose your job, this protection is gone, and if your health has changed, it may be challenging to qualify for more insurance.
You need to carry a policy that you control. Having enough coverage will allow your family to maintain their lifestyle until they figure out the next step in their lives. If you cannot afford all the insurance, some insurance coverage is better than none.
What Type of Insurance is The Best Life Insurance for New Parents
A. Level term insurance is the least expensive and the most popular. You’ repaying for “pure protection” and not trying to accumulate cash within the policy. Level term insurance pays the death benefit and for a specific term period. The premiums also remain the same during the term period. Term insurance is available in 10, 15, 20, 30, 35, and 40 year term periods. Be careful not to choose too short of a term period. At the end of the term period, you then must shop for a new policy based on your newly attained age and health condition.
B. Permanent life insurance is another option. This type of policy will pay out regardless of when you die. It lasts for your whole life. However, protection for your entire life comes at a higher price. Permanent life has a cash value account where you can build up savings. The best choices of permanent life if you go this direction include whole life or universal life policy.
If you choose to purchase a whole life policy, understand that your beneficiary will only receive the death benefit no matter how much cash value is in the policy. With a universal life policy, you can skip premium payments or change the premium payment. You can purchase a guaranteed universal life policy or a more popular index universal life that will build cash for retirement or college funding and last a lifetime.
How Many Years Do You need Insurance Protection?
If you have a newborn in the house and are not planning on having any more children, a 20 or 25-year term plan would be a good option. If you are planning on having children in the future, a 30-year term plan will make more sense. In purchasing a policy, a general rule would be to consider the length of time you need coverage based on when your children are heading off to college and will be living on their own.
Ensuring Both Parents on a Single Policy
Although joint life insurance coverage is a little cheaper, it is better to take out two separate policies. Joint insurance coverage only pays a claim once. Joint coverage means that if one partner dies, the other no longer has coverage and must apply for new coverage. Many insurance companies no longer offer joint coverage do to other complications with this type of policy.
The Importance of Buying a Policy Early
The policy price ofter determines the best life insurance for new parents. Your age, health, and amount of coverage determine what you will pay. The longer you wait to purchase the more expensive it becomes. If you are young in your 20’s, you will pay less than if you are 30 or 40 years of age. It is better to apply now than delay. A medical situation can occur without notice making it more difficult and expensive to obtain coverage. You have today there is no guarantee of a tomorrow.
Qualifying for coverage is not based on credit ratings, assets, and annual income unless you are applying for a more substantial amount of insurance coverage. Once your application is approved, you can change various factors, nothing is written in stone at this point. You can increase or decrease the years you want coverage for and the amount of coverage or cancel the application if you change your mind.
How The Price For Your Policy is Determined
Rates for your life insurance is based on the length of time you want coverage for, the amount of coverage, and your life expectancy. Current and past health conditions affect policy costs. So, insurance companies will want to know as much as possible about your health. Common factors like height, weight, blood pressure, all figure into the premium.
Lifestyle factors also enter the final decision such as exercise and driving record as well as your immediate family’s health history related to cancer, heart disease, and diabetes. Insurance company ratings, which determine cost are “Standard,” “Standard plus,” “Preferred,” “Preferred Plus,” and “Substandard.”
How to Avoid The Medical Exam
Policies today use a quick issue underwriting process. Depending on the amount of insurance applied for with healthy clients, there are no physical exams and no blood tests. The coverage is easy to apply for by answering a few health questions on the online application. Approval is usually instantly or in 48 hours, providing there are no health-related issues. These insurance applications are consumer-driven and, in some cases, do not require a meeting with an agent.
Once approved, the policy can be printed from your computer and are inforced immediately. Some company’s offer non-medical level term life insurance with death benefits up to $500,000! These policies are dependent on your age.
One company offers coverage up to age 60 for a $500,000 death benefit if you’re in good health and qualify for a “standard” rate. These policies do require an agent or insurance broker’s input. They can be completed online and approved online and delivered online and place in force with confidence due to today’s technology.
How to Make Life Insurance for New Parents More Affordable
- You can reduce the death amount and add an accidental death plan to the policy. In the case of death by an accident, the policy will pay out double the face amount of the policy. For example, a $100,000 death benefit would pay $200,000 if death occurred due to an accident.
- Buy as much life insurance as you can afford and supplement it for a short period with group life insurance at work. When the financial situation changes, purchase the rest of the coverage needed through a personal policy.
- Only cover one parent, take out an accidental death benefit policy on the other parent.
Why Use Strahan Financial Services
It is essential to use an experienced independent agent. As independent agents, we have extensive knowledge of the insurance industry and how to qualify you for the best possible life insurance rates with no medical exam. Many of the websites offering life insurance are call centers with cubicles of agents using a script to sell you life insurance. Some of the web sites sell your information to 10 or more agents, which results in you receiving many unending calls. We are not a call center.
Our staff has extensive knowledge of the insurance industry. We are independent and know the companies, the products they offer. We use the latest technology to improve your experience and get your policy issued as fast as possible at the least expensive rate.
Some of the top-rated companies we work with are Banner Legal and General, Mutual of Omaha, Transamerica, SBLI, Protective Life, Assurity, Pacific, American General, and Prudential, to name a few. We are not obligated to use any designated company. Finding the company that is the right fit for your situation, at the lowest possible price is our goal.
You can even run a needs analysis, health analyzer, receive quotes, select a product and a carrier and complete a pre-application on your own!