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5 Questions (and Answers) Expecting Moms Have About Life Insurance
If you are expecting a child, life insurance is a necessary financial tool that you need to have in your arsenal. But if this is your first time looking for coverage, you likely have questions. The good news is that we have answers. Let's jump right in . . .
Q: What type of life insurance coverage is best for new parents -- term or permanent?
A: Before this question can be answered accurately, understand that there is no "one size fits all" type of life insurance policy. If someone tells you "everyone just needs term insurance", that's a red flag. There are a handful of questions that you would need to answer before a recommendation could be made. The answers to these questions would help to determine what type of coverage you need.
There are free online calculators, but a good life insurance agent is invaluable. They're aware of all of the questions that you should be asking yourself to make sure that you're thinking of everything. Online calculators can be a good place to start, but nothing beats a human in being able to ask what your concerns are, what your goals are for your future, and being able to customize a solution to accommodate that.
There are two main types of life insurance products, and then within each category are subcategories or products. Each one has it's strengths and weaknesses and are built to achieve different things. Term insurance is cheap, and is a great way to get a large amount of coverage for a lower cost. If your budget is tight, this is an affordable option. Permanent insurance provides lifelong coverage, and it also accumulates cash within the policy over time. This cash can be used however you choose: supplement retirement income, start a business, remodel your home, cover your bills during a rough financial patch, etc.
Oftentimes, the best solution can be having a combination of both term and permanent life insurance policies. The term policy can beef up your coverage amounts while you're carrying a mortgage on your home, have small kids you're still raising and putting through college, and then the permanent policy will take you through to the end of your life and can provide funds to a surviving spouse, or cover estate costs for your children and much more.
Q: Would the type of coverage I want differ if I am a working mom vs. a stay-at-home mom?
A: Where this will make a difference is in the overall amount of coverage that you put in place. Both situations still need life insurance, because mom's that work both outside of the home and inside of the home are so valuable.
While stay at home mom's aren't compensated for their work, if something were to happen to them, it would be very expensive to replace all of the things that they do. From childcare, cooking, laundry services, chauffeuring, household management, tutoring, and on and on. They're "on-call" 24 hours a day, 7 days a week. Salary.com reports that stay-at-home parents contribute the equivalent of a $162,581 annual salary to their households!
Mom's who work outside the household also contribute an income, which may be critical to the family financially. This would mean that replacing that income would need to be taken into consideration when figuring out how much life insurance is needed.
Q: The company where I work offers life insurance, is this enough?
A: Having life insurance through your employer is a great benefit or perk to have, but in no situation (except for one) should this be the only life insurance coverage you have, and this is for many reasons.
First, life insurance policies that are offered through employers are "Group" policies, and they are very limited in a number of ways. They're more like generic,"one-size fits all" type of policies. The coverage is often a lump sum amount, such as $50,000 or it may be one or two times your salary. At first this might seem like a good amount of money, but when you really think about all the financial demands that your family would have over the years, it really wouldn't last them very long before they find themselves in a difficult situation.
Second, and this is something that many people don't realize until they find themselves in this situation, when you leave that job (whether you quit, you're fired, or you're laid off) you will lose that coverage. If you're an executive, you might find that in your 'golden parachute" package that you are allowed to keep this policy, but for most people that's not the case. If you don't have a policy that you own, you have no control over the policy, and it can put your family at risk.
Earlier I said that there was one exception as to when this should be your only life insurance coverage. If you have pre-existing health conditions and you have been unable to get life insurance coverage on your own, then coverage through your employer might be your only option. This is because everyone qualifies, and there is no medical exam required.
If the coverage that your employer offers you is at no cost to you, by all means take it! It's free coverage. But it's very important that you also have a policy that you own, that's portable. Want to learn more about the benefits of owning your own policy? Click here.
Q: Are there any problems I might have getting coverage now that I'm pregnant?
If it's early in your pregnancy and there are no medical complications, you should be able to get life insurance. If you're farther along in your pregnancy and there are medical issues or complications involved, it may be difficult to put a policy in place. The life insurance company you're applying for coverage with may want to wait until after you give birth. This is why if you are planning on having children, we recommend getting coverage in place as soon as possible.
Q: What can I expect to pay for life insurance coverage?
A: The amount of premiums that you pay for life insurance coverage is based on four main factors. Two of these factors are your age and health. In a nutshell, the younger and healthier you are, the cheaper it will be. Here's an example: A healthy, 30 year old woman could get a 20 year term policy for $250,000 for about $13 a month. That's a lot of peace of mind for $13!
Keep in mind that you will never be younger than you are now. And your health is something that is never guaranteed. It can change suddenly and unexpectedly. You don't want to put off getting coverage in place, or figure that you'll wait and get it "down the line". If you do this you're taking a chance that your health might change and life insurance is no longer an option for you, or it will become un-affordable because you now have pre-existing conditions. Get coverage in place now, and lock your premiums in for life. Even if you start small, something is better than nothing.
Working with the right life insurance agent is invaluable for you. Leverage their experience and relationships to get the best coverage in place. They will take you step by step through the process, answering all of your questions and doing all the hard work for you. They know these products, the different carriers, and how to navigate the application process which can mean the difference between you getting denied for a policy, or being approved at the best rate possible.
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