Having a child and starting a new family is very exciting and enriching experience. But along with all of the happy memories your about to create, parenthood is a very fine balancing act. Not wishing to apply any additional pressure, but you are now responsible for a brand new human being. Many new parents remember the fond memories of having time to themselves and having the ability to sleep for 8 hours.
Unfortunately there is no user guide to becoming new parents, raising young children will bring all sorts of new challenges and responsibilities. As your family starts to grow and you become acclimatised to the whirlwind experience of having young children. Planning for the future is more important than most people think, making sure that you’ve got the right measures in place should the worst happen.
Life insurance is most likely a subject below removing crayon from the walls(Mrs Hinch) or trying to reason with a toddler. However, it is still be something very important for you and your family to consider.
In This Guide:
Is Life Insurance For New Parents Important?
For many it may not seem like a high priority when having a child, but having life insurance protection can be one of the ways to support you and financially take care of your family.
As children grow from small babies and into their pre-school years they need a lot of care and attention, which always results in a lot of new monthly costs. During the early years of childhood, it is vital that someone looks after the children at home and finds the balance of working in their free time.
Within most two parent households raising a child can be split between each parent. Many parents alternate working and staying at home between them. Or potentially, one parent will work and the other will stay at home to look after the children. A steady income is very important for helping to pay for the everyday costs that come with being new parents.
Reducing the strain for your family, is a top priority as a parent. In practical terms, if either parent were to pass away. It would cause emotional damage and cause extreme stress for the surviving family. If the main earner passed away it would put more strain on the partner looking after the child at home. If the stay at home parent were to pass away, the other parent might need to work less or quit their job to be at home. Having children can be very expensive both financially and emotionally. By having a life insurance policy in place offers peace of mind to protect your family.
The Cost Of Having Children
There are many costs that may need protecting in the event of a child’s parent or guardian passing away. Although it is not a subject you would want to think about. But it’s important to have a plan in place should the worst happen to you or your partner.
Housing: All families will either have a mortgage or rent to pay. As an ongoing monthly payment which needs to be paid. The death of a partner could put that at risk. Having to deal with the emotional struggle of facing the loss of a loved one should be the only reason for sadness. By having adequate protection cover in place would mean being able to keep your home and focus on more important things.
Debt: It may be an obvious observation but many loans and credit card bills will not go away because someone has passed away. They will need to be paid and be a dreadful experience for a loved one to deal with.
ChildCare: It is not just the parents income that would be missed after death, but also the responsibilities of the remaining parent. A death might force the surviving parent to quit work or to pay more for additional childcare.
Education: As children grow, their educational needs change from learning with a parent to hopefully a university placement. These costs include tuition fees, uniform, books and field trips which are all going to come up every now and again. If further education i.e a university place is a priority then you could get a life insurance policy which could cover this cost should you die during those years of working.
How much will a New Parents life insurance policy pay out?
There are many different factors that you will need to consider when working out the size of a life insurance policy as a new parent.
Generally speaking if your budget allows it, you will want the value of your life insurance policy to be approximately 10 times the value of your annual income. This will of course depend on things like the size and age of your family, as well as whether or not you are the primary earner for your household.
If you are not the primary earner and spend most of your time at home looking after your children, then this should factor into the nature of your life insurance policy.
Should We Get Joint Life Insurance?
There are many different types of life insurance protection, at Life Insurance Cover we discuss the benefits of the correct level of cover. Instead of taking out two separate life insurance policies, a joint policy can usually work out slightly cheaper.
However, it is important to advise that there is only one payout and one claim, so if both of you were to die then your beneficiaries would only receive one payment from the insurer.
With two single policies you would both be protected if the other passed away. It is important to calculate each parents earnings/ costs for childcare. Two single policies may only be slightly more expensive than a joint policy, so it’s definitely worth comparing both against what you may need.
What Life Insurance Is Best For New Parents?
As previously mentioned joint protection/individual policies are a starting point. If you’re a new parent looking for life insurance and you have a mortgage. You may want to go for a decreasing term life insurance policy. Decreasing term policies are designed to cover a payment that decreases over time, like a mortgage.
With life insurance for new parents it’s important to get enough of a claim payment, to cover the costs that have to be taken care of. Also including enough money left over to help the children get by over the next few years. A level term policy pays the same agreed amount and lasts for the length of time you choose.
Compare Life Insurance For New Parents
In order to get the most affordable life insurance protection as a new parent. You should try our free life insurance comparison service.
By using our simple quote form. You will be a step closer to protecting the long term future for your family. Just let our specialist team do the hard work for you. Offering peace of mind and letting you enjoy your family time.