Why Do New Parents Need Life Insurance?
Updated on June 6, 2022 by Team ShineSheets
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Starting a family is an exciting journey to begin, and yet it’s also one that can be fraught with lots of concerns. You’ll suddenly become responsible for a fresh, fragile little person and have a duty of care to them for at least 18 years or more.
This is why experts agree that having life insurance is a must for new parents. But why does it matter so much, and what are the main things to consider when choosing a policy?
Paying Off Debts
For a lot of people, life insurance is primarily appealing because it offers them a way to ensure that if they die unexpectedly, their family isn’t burdened with any debts they leave behind.
A mortgage is the most common debt that life insurance policies are designed to deal with, and there are packages that explicitly seek to pay this off. Of course, if you’ve got other debts to consider as well, such as a car or a student loan, then you might need a life insurance deal that goes beyond your mortgage.
Providing Financial Stability
The next reason for new parents to buy life insurance is to provide for their children after their death, assuming that they pass away earlier than would be expected, typically while still in full-time employment.
This applies whether you are in a couple, or you are a single parent. In fact, two life insurance categories apply to single parents in particular; term and permanent insurance.
Term life insurance is a policy that you buy for a fixed period, typically between 10 and 30 years. If you die within this window, your policy will pay out a predetermined amount, which could be anywhere from a few thousand dollars, to several million.
Permanent life insurance lasts indefinitely and costs more as a result. They essentially guarantee that whenever you die, you will have something to leave behind for your family to make use of in whatever way they see fit.
The costs of life insurance can vary wildly, depending on the type you pick and the amount of cover a policy provides. This will usually align with your income and your circumstances, so this is something to think carefully about if you are a new parent.
Creating a Safety Net For Critical Illness
Another aspect of many life insurance policies is that of critical illness cover. This is typically an add-on for a standard term or permanent policy, and can also be purchased as a distinct product in its own right.
As the name suggests, critical illness cover will pay out if you or your partner suffer from a serious malady; one which is significant enough to disrupt your income for a protracted period, or even to prevent you from working again permanently.
This scenario, in which you cannot draw a salary but are still alive, is one that would also place a significant burden on your family and its financial circumstances. The insurance payout will mean that your child will not have to go through any hardship as a result of this.
The Bottom Line
Whether you own your own home or aspire to in the future, whether you have a high flying job or are still working out which career path to pick, you need life insurance if you have a child.
This doesn’t have to be expensive, even though there will invariably be costs involved. It’s also worth checking to see if insurance is provided as part of your employer’s benefits package, and the extent of the cover that this deal offers if you want to save money.
Without insurance, your first child and any subsequent siblings will be in a precarious position. Since you don’t need to leave them at the mercy of the unpredictability of life, getting an appropriate life insurance policy is really the only way to go, and comparing quotes online makes it easy as well.