Life insurance for new parents
If you’ve recently welcomed a new addition to your family, then congratulations are in order! With so many new responsibilities in your life, making sure you have the right cover for your family can understandably be placed at the bottom of the priority list.
However, getting life insurance sorted for your family shouldn’t be left too long, as the longer you leave it, the more likely it is that you just never get around to it, leaving your family at risk should the worst happen.
Why life insurance is important for parents
With life insurance, you’re paid out a lump sum which can contribute to sustaining your family financially in the event of an unfortunate incident. Having life insurance when you’re young and don’t have any dependents might seem unnecessary, but the second you start to build a family, it’s important that you protect those who depend on you financially.
If something were to happen to you, you want to ensure that your family is taken care of; you might want to make sure they’re able to continue to live in the family home, or that childcare costs are covered.
Some insurance providers also offer great benefits for your children when you take out life insurance, including 6 months of free cover for newborns, and even free trauma insurance for children.
Do both parents need to be covered?
It can make sense to just insure one parent if they are earning money while the other is looking after the child at home, but it’s important to consider getting life insurance for both parents if you’re able.
This is because if something happens to the stay-at-home parent, it might very well mean that the working parent then needs to give up work entirely, or fork out for childcare while they continue to work to bring in money for the family.
If you have an individual life insurance policy for each of the parents, you’ll be able to rest assured that your family will be provided for and looked after, no matter the circumstance.
How much cover do you need?
There’s no right or wrong answer to this question - how much cover you need will be specific to your individual situation and what life stage you’re at. You’ll want to consider:
Your mortgage
Given that your mortgage is most likely your largest financial commitment, you’ll need to review whether your family could keep up the payments in the event of your passing. If you have a large mortgage, your level of life insurance should reflect this.
Living expenses
How much will your family need to maintain your current living expenses should the worst happen? You’ll need to take a look at things like your power bills, credit card payments, and transportation costs to ensure your life insurance payout will be able to cover what your family needs to get by.
Childcare
As we mentioned before, if the stay-at-home parent were to pass away, you’d need to think about how you would care for your children. You’ll likely need to factor in the cost of childcare while you work, or if you would prefer to be at home with your children, you’ll need to make sure your policy amount reflects this so you don’t have to worry about returning to work so soon.
Education costs
It’s no secret that raising children is an expensive endeavour, and if you want them to have a good education, you’ll need to have enough money to cover this. Should one parent pass away, a lump sum payment from your life insurance policy can cover things like school fees, uniforms, and even university costs.
Raising a child is a tremendously exciting time, but it also means that it’s time to get serious about your financial responsibilities. Taking steps to get life insurance cover sorted for you and/or your spouse is important in ensuring that your family has a bright future.
If you’d like to have a chat about what cover you might need for your new family member, give us a call! Our friendly team of financial advice experts is here to help you do right by your family.
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