As a new parent, you are already overwhelmed with your major life change! This life changing event also means it is time to take a close look at your insurance to make sure your precious family is protected.
Where do you start?
Life Insurance. Life insurance pays out a death benefit to your survivors.
- Even if you are a stay at home parent, you carry an economic value.
- The rule of thumb is that you need approximately 12-14 times your income to keep your family afloat.
- If you are a stay at home parent, you may need $500k to $1mil to replace your economic value to hire someone to help care for the children.
- You also need to carry your insurance until your youngest child is about 25 (out of the nest). This may mean if you just had your first child, you may want to consider a longer term policy such as a 30 year term.
- Beware of naming minor children as beneficiaries as they cannot have access to the funds until age 18. It is best to name an adult as a contingent beneficiary or better yet, to create a will and/or trust with an attorney.
- Shop around using a brokerage such as Set for Life Insurance to help you find the best rates.
Disability Insurance. Disability insurance pays a monthly benefit if you are too sick or injured to work.
- If you have a group disability policy, consider purchasing an individual policy to help fill the gap between the group policy payout (taxable) and what your family needs.
- Make sure the policy is own occupation and covers you in your line of work. If you are a doctor, make sure the policy is specialty specific.
- If you are pregnant, the policy most likely will not cover your current pregnancy.
For more information about life and disability insurance for new parents, contact Set for Life Insurance today!