When you’ve got a ‘bun in the oven’, life can seem like a whirlwind. There’s so much to prepare for!
Bringing a new life into this world is an exciting and sometimes stressful time, which is why it makes perfect sense that life insurance for the upcoming baby may not seem like a priority. However, the best time to purchase a life insurance policy is immediately upon the birth of the child, because the cost of coverage will only go up as the baby grows older.
And, don’t forget: life insurance is crucial for mom, too! It’s common for many of us to not even consider getting coverage for ourselves until there’s a dependent son or daughter in our lives.
Moreover, the addition of a new member of the family is a great time to get your financial house in order. When you’re going about the business of outfitting the nursery, shopping for baby clothes, and preparing for the big day, why not explore the options related to life insurance coverage while you’re at it?
In this week’s blog post, Shell Mutual Insurance is offering up some life insurance advice for expecting moms. While there are plenty of stressors involved in bringing a child to term, getting life insurance doesn’t have to be one of them!
Coverage for Baby
It may seem counterintuitive to purchase life insurance for a newborn, as they don’t have any dependents of their own.
However, as mentioned above, it will never cost as little to insure the tiny human than when they are first born. In many cases, life insurance policy riders for infant children can wind up costing just a few dollars a month.
So, what do you get with such coverage? Let’s take a step back and look at life insurance from a 30,000-foot perspective. What’s the actual point of it for those who are covered?
Life Insurance, Simplified
The entire point of life insurance coverage is to provide a financial lump sum to named beneficiaries if and when the insured dies. Why, then, insure a newborn child whose life is still fully ahead of them?
The answers to this question are twofold
- Worst-case scenarios do happen. As upsetting as the thought may be, premature death is a risk factor for all of us, no matter how old we are. Having life insurance coverage for a newborn child is a safe hedge against final expenses should tragedy strike.
- Policies covering newborn children increase in value over time. A life insurance policy for an infant may only end up costing a few dollars a month. But, over time, the policy can increase in value, providing equity for use later in life.
Coverage for Mom
As it is for the baby, obtaining life insurance coverage for the mother is an exceptionally smart financial move to make.
The answer is the baby.
A new dependent is the absolute best reason to obtain life insurance coverage. If something should happen to those providing for the child, it makes sense to have a safety net in place that will help to assure that dependents will be provided for as they age.
Remember that life insurance coverage comes in two flavors: term and whole.
Term Life Insurance
Term life insurance is called this because the policy is time-bound. It is only in force for a set term—often five, ten, or 20 years in length. Term life insurance may make sense for parents of a new child because the premiums are often lower, and the term can be set to run the course of the child’s life into maturity.
Whole life insurance functions a bit differently compared to term life insurance. A whole life insurance policy covers the insured for—as you might expect—their whole life. It’s for this reason that whole life insurance policies double as investment vehicles for the insured, as loans can be taken out against them and the equity they accumulate can be leveraged for things like college expenses or other life event costs.
Which Policy to Choose?
Should an expecting mother choose term life insurance coverage or whole life insurance coverage? It depends.
Numerous factors come into play—things like budget, income level, existing coverage and how much financial risk the parents are willing to take.
The great news is that Shell Mutual Insurance is here to help by providing you with a variety of coverage options from a broad selection of policy providers. Getting coverage for baby or mommy is easy; contact us today to get started.