Being a parent is both exciting and scary. You have another life to safeguard and everything changes in a flash. Planning for the future is one of the most important actions you can do as a parent. Although it can be difficult to talk about, it is important to consider how you will best care for your child in the event of your death. Although life insurance can help ensure your child’s financial security, it can be difficult to know what type of insurance to buy. This guide will give you an overview of the best life insurance options for parents.
Which type of life insurance should a new parent purchase?
In the unlikely event of a sudden or unexpected death, life insurance is designed to protect your loved ones’ livelihoods. Life insurance helps to ensure that your spouse and dependents can continue the lifestyle they enjoyed while you were alive. Calculate how much coverage you require based upon your individual living situation. However, the payout is usually to cover everything from future mortgage payments to education costs for your child. Life insurance also covers:
- Regular expenses
- Care for dependents
- Funeral costs
- Unresolved Debt
Most cases, the younger, healthier you are the more affordable your life coverage will be. This is why most experts recommend that you purchase life insurance as soon you start a family. It is important to take into account your daily expenses, future and current debts, as well as the long-term expenses such as college tuition, when deciding on life insurance policies.
Let’s say, for example, you decide to stay home with your newborn and rely solely on your spouse’s income. How would you pay for your daily expenses if they died suddenly? If you had to return to work, would you have enough money to cover childcare? These factors will influence the type of policy that you need and its value.
Types of life insurance available for new parents
Term life
There are two types of life insurance policies: permanent and term. Term life insurance covers coverage for a specific term and provides a death benefit to the beneficiary in the event that the insured dies within that period. Term insurance is popular among parents as it can be purchased for a specific number of years (usually 30), to cover milestones such as the payment of a mortgage or the graduation of a child.
Term insurance is usually cheaper than permanent insurance. The premium will not rise over the term. However, once your term ends, you won’t have any life insurance. Renewing the term could be very costly. New parents might find term life policies beneficial in several situations.
Term life is recommended
- New parents might be able to buy more coverage if they have a single income.
- You will be more likely to save for retirement when you are younger. If your children are old enough, you won’t need insurance after your policy expires.
Permanent life insurance
Permanent life insurance covers the insured until their death, regardless of age. There are many types of permanent insurance, including universal life (which may include market-influenced variable value), final expense life (which only covers burial expenses), and whole. A whole life policy, in addition to its actual death benefit and cash value from premium payments, can also accumulate cash value that can be withdrawn from the insured or loaned. Your rate will remain fixed for life once you purchase a policy. This policy is almost guaranteed that it will pay out so it is often more costly.
It is a good idea to live a full life.
- If you think you might need life insurance for a longer term than you currently have, lock in your premium rate now.
- Permanent life insurance is a low-risk investment option if you have the means to pay it and want additional benefits such as cash value.
New parents can get the best life insurance
It is important to select the right company when you’re ready to buy a policy. Although obtaining a quote for life insurance for parents is a good way to compare, it’s important to consider other factors, such as customer reviews, policies offered, and consumer ratings. These are all factors that can help you decide which best life insurers. These are some national providers you might want to consider.
MetLife
MetLife has become a trusted name in life insurance. They hold the largest market share. MetLife is used by many employers so it’s possible to buy a policy through your work place. MetLife offers a mobile app that allows you to make premium payments or review policies. This is a great option for parents who are busy. It has also been awarded an A+ (Superior), rating by AM Best.
State Farm
State Farm is best known for its homeowner’s and auto insurance. However, State Farm’s life insurance received an 808-point rating from J.D. Power in 2019. You can easily get a quote online for a variety of life insurance policies. If you prefer to talk to a professional, State Farm has offices located all across the country. You may also be eligible for discounts on other policies if you are a customer. This is a great option for parents on a tight budget.
Guardian
Guardian is the most convenient way to purchase coverage online and may be the best choice for new parents. You will also find calculators and other resources on the website to help you understand the various policies. It is also easy to obtain a complete quote tailored for your life stage. Guardian has received very positive customer reviews. AM Best awarded Guardian a A++ (Superior), rating in 2020.
New families need life insurance
It is easy for life to get chaotic when a baby arrives. If you don’t start looking early, you may never be able to find the right insurance policy. Tragedies can happen at any time. New parents should purchase a policy as soon as possible. You will feel more secure knowing that you have taken the right steps to ensure your family’s financial security.