How To Baby-Proof Your Bank Accountby Jacoba Urist
We all know that getting ready for a baby means plugging up those outlets, placing a gate at the edge of the stairs, and picking out the safest car seat for the money.
But so many expectant moms forget to make one of the most important new parent purchases there is: life insurance, the best way to baby proof your bank account.
Wait! Don’t stop reading. I know life insurance is probably the last thing you want to think about as you prepare for the newest, cutest member of your family, but unfortunately, there’s no way around it. Responsible parenting means that you have to deal with subjects you’d rather put out of your mind - so you can protect your child’s financial future no matter what comes down the pike.
What Is Life Insurance?
First things first. Life insurance really isn’t some big, scary thing. For most parents, it’s just a contract (or a policy) that you buy from an insurance company (or a provider) that promises to pay out a large nut if something happens to you or your partner (or both of you) while your kids are still young. Essentially, you ‘re buying peace of mind, so you know that you and your child can live comfortably even if a worst-case scenario strikes.
Life insurance usually replaces the lost income of your primary breadwinner, so most families take out a policy on the person who brings home the bulk of the bacon, so to speak. And if you rely on both of your incomes to make ends meet, you should have two policies.
How Do I Buy It?
As soon as you’re done reading this, you can start the process online. Many reputable companies will let you fill out some basic health information (for you or your spouse or both of you, depending on who you want to insure), and then give you an estimate within a few minutes so you can compare policies right from home. Then, once you’ve chosen a few places to follow up with, you arrange an appointment with an actual agent and schedule a routine physical exam for the parent you want to insure. Don’t worry: there’s absolutely no reason to be nervous about the interview or the check-up. I promise, nobody is trying to trip you up. They’re just trying to figure out how much to charge you based on all the data they’ve collected.
How Much Do I Need?
The amount of your premiums (what you’ll pay every month) depends on your overall health, some of your personal habits, and most importantly, how much life insurance you'd like to purchase. I tell clients to look at their family’s overall financial picture - how much you've saved, much you spend every month, how big your mortgage is - and then, try to pick a number that would allow you to continue living the way you want for the next twenty years even if something were to happen to your main earner.
And remember: you can always add more coverage later so don’t get stuck on finding that perfect number. For most couples, the big hurdle is placing that first phone call and making that first purchase. At the end of the day though, something is always better than nothing and it’s never too late for a parent of young kids to buy a life insurance policy.
When Should I Get It?
Well, the very best time is before you get pregnant or three to six months after giving birth. Some companies still consider pregnancy a medical risk and may put you in what they call, a lower rating class, where they charge you higher premiums for the same amount of coverage. But fear not: it’s always the right time for a father to get the ball rolling on a new policy, so make sure you share all of this with your partner, and tell him how important it is to baby proof your bank account.