Financial Planning for New Parents
More than 4 million babies are born in the United States each year. For many parents, the expense of welcoming a new family member can be a bit of a shock, especially if they have not taken the time to revise their family budget and life insurance needs.
Nothing changes your outlook on life quite as fast as having a baby. Things that once seemed unimportant are now so very important – from finding money for diapers to funding a future college career.
Life insurance coverage is also a suddenly important fact of life when a new baby arrives on the scene. Every responsible parent needs to plan for the future – and that includes planning for a future where one or both parents are potentially gone. It is important for parents to provide the protection their children will need – and the funds they will need – should the worst happen. Buying life insurance coverage is an essential part of being a parent, and the time to start is now.
New parents have a lot of decisions to make, and life insurance should definitely be one of them. A comprehensive life insurance review should accompany every significant life event, including the birth or adoption of a child.
A good rule of thumb for life insurance shoppers – including new parents – is to purchase coverage between 10 and 20 times the annual income of the person to be insured. Even families with two breadwinners may want to consider purchasing this level of life insurance coverage. The sudden death of one partner may mean that the spouse left behind will need to quit his or her job to take care of the children for at least a couple of years.
It is important to review coverage levels from time to time. Conducting a periodic review of insurance coverage is always a good idea, and many families choose to do this on an annual basis. Insurance needs change from time to time, and conducting a periodic review is the best way to ensure that there is sufficient coverage in place for all family members, including the newest addition.
