Life insurance may not have been on your radar prior to becoming a mother; you’re not alone. Most people don’t consider life insurance until they are a parent; once their baby is born, they want to make sure that he or she is financially protected if anything were to happen to them.
Life insurance can be an overwhelming topic to understand in full, there are a lot of aspects to get to know and there are a lot of different things to consider. A life insurance attorney in Philadelphia summed up exactly how life insurance works for new mothers that may not be familiar with life insurance, “Life insurance is a promise between an insurance company and the insurance policyholder that states after he or she passes away, the insurance company will pay the beneficiary listed on the insurance policy a designated amount of money.”
Here are some other pointers for new mothers to keep in mind when beginning to look into purchasing a life insurance policy:
How Much Life Insurance Should I Buy?
In order to best determine how much life insurance you should buy, consider your family’s financial situation and potential needs. The answer to this question is different for every family, but consider these points in order to determine the appropriate amount to spend on life insurance:
- Determine how many years of income you want a life insurance policy to replace
- Think about what financial obligations you want this policy to take care of for your children; such as college tuition, counseling, and medical bills
- What services do you provide your child with that will have to be replaced? Health insurance? Daycare? Car insurance? Any/ all living expenses?
- Do you have money in your savings account? Designate where that will go and what it will cover
Decide on Beneficiaries
If you are married, it’s common and recommended that you name your spouse as the beneficiary of your life insurance policy. Your spouse will get the death benefits from your policy and will be able to take care of your children with it and spend it accordingly. If your child is eighteen or older, you can name him or her as the beneficiary and he or she will receive the payment from the life insurance policy.
However, on a life insurance policy, you can’t name your child as the beneficiary if he or she is under the age of eighteen. Similarly, if you are not naming your spouse as the beneficiary, you are able to set up a life insurance trust fund that will hold money for your children. In other words, the trust is the beneficiary. With this trust, you will also have to select a trustee in order to manage the trust according to the instructions you give.
How Life Insurance is Priced
The price of a life insurance policy is different for every policy and different for every insurance company. Insurance companies take into consideration your age, your gender (women usually pay less than men), your health and habits- good and bad.
In order to get a life insurance quote, you can look online prior to working with a financial advisor.
Stay At Home Parents Need Life Insurance Policies
This is a crucial point for new mothers to keep in mind. Both parents, even stay at home moms need life insurance. Many new mothers that decide to stay at home moms don’t consider purchasing a life insurance policy because they aren’t bringing in a steady income. However, stay at home moms provide valuable services such as child care services that will need to be replaced if anything happens to her.
UK life insurance broker Reassured wrote this in-depth article on the importance of life cover for all moms.
Protect Your Children by Purchasing a Life Insurance Policy Today
Purchasing a life insurance policy will make the legal process easier and less painful for your family if something were to happen to you. Knowing your family is financially stable is important. Be proactive and protect your children from financial hardships, look into life insurance policies and options today.