Life Insurance Tips for New Parents
Having a baby can focus on the gaps in the financial plan. New parents often feel they need to find ways to provide financial security to their growing families, including buying life insurance. With so many things to do competing for your attention and money, buying a life insurance can fall to the bottom of the list.
When you are ready to put this puzzle piece into your financial plan, here are the most important things to know in the beginning.
There is never a better time to buy now
When you know you need life insurance, there is a significant financial advantage in buying it as soon as possible. This is because you probably won't get a better price in the future and the freeze on the rate will pay off over the years. Life insurance quotes will rise every year you wait to buy.
And new health conditions in the future will increase the costs you will pay for the life of the policy, whether you are purchasing 10 years of term life insurance or a permanent life insurance policy to last indefinitely.
In addition, life insurance rates have started to rise recently. Life insurers are adjusting prices upwards to offset their lower investment returns in this low interest rate environment. You can still get rates that have not been adequate, but perhaps not for long.
You may be able to obtain a large amount of life insurance without taking a medical examination
Traditionally, buying a life insurance often meant filling out a long questionnaire, doing a life insurance medical exam, and waiting for the insurer to get your medical record. Some policies still use this process, with the subscription process taking a month or more.
But the options for competitively priced life insurance without a medical exam have increased in recent years. And with the coronavirus pandemic, requesting a medical exam doesn't fly with customers.
To comply, many life insurance companies have loosened their rules for anyone who needs a medical exam. If you are younger (say, under the age of 50 or 60, depending on the company) and in good health, there are options for fast life insurance that don't require an exam. There is also the opportunity to get more coverage ($ 2 million and above) without exam during the pandemic.
You are probably overestimating the cost of life insurance
Studies have shown that consumers often overestimate the cost of life insurance. The only way to know how much you will pay is to get quotes.
Life insurance quotes are typically based on age, gender, health conditions, family health history and any dangerous hobbies (such as scuba diving) or professions, so each quote is highly personalized.
Don't go alone
If one of the things that keep you from buying a life insurance is not knowing where to start, you should know that buyers should ask for help, whether you feel lost in the process or that you are confident in your decisions. cover.
An independent independent life insurance agent or consultant should help you shop for multiple companies for quotes and make sure that choosing the type of life insurance matches your financial goals.
Some consultants only sell policies from one company. While getting a price from them can be valuable, you also want to know what the competition offers.
If the price is too high, buy what you can
The free life insurance calculators available online can help you find out how much life insurance you need. Even your agent can help you. If you are purchasing life insurance to cover income replacement for many years and financial bonds like a mortgage, it is not difficult to find out that you need over $ 1 million in life insurance.
If you pay it and the cost doesn't match your budget, don't abandon the mission. Instead, buy what you can afford now, with the plan to purchase additional coverage in the future. Having a closed life insurance is better than not having one.
Do not rely on life insurance through work
Workplace life insurance is easy to obtain and affordable, sometimes even free for the employee, but it is best to think of it as a life insurance supplement to a policy you buy yourself.
Group life insurance available through work ends when you leave work. It is generally only available in small quantities, such as once or twice your annual salary. This won't go very far in helping your family pay their expenses for many years if you die unexpectedly.
It is best to have your individual policy in a coverage amount sufficient for your needs.
Life insurance for children is not a good use of money
Life insurance for children is often marketed to parents and grandparents as a way to protect the child's "future insurability": if they develop medical conditions that make them uninsurable later in life, they will have insurance about life from childhood.
But it is likely that they will be insurable later in life. For now, the money can be better spent on enough life insurance for parents or a 529 college savings plan for the child.