As
if things didn't get busy enough since
you brought home the little bundle of
joy. Now, you're expected to put down
the XBox controller and suddenly grow up
and get mature? That's just taking it
a little too far. It's hard enough just
getting to work not to mention actually
being functional (naps in the car at
lunch are now common) on limited hours
of sleep with frequent feedings. Even
if you're not actually doing the
feeding, you're paying in some way. My
wife made me lie on the floor next to
her rocking chair at 3 in the
morning...a shared pain strategy which I
complained about but could respect. So
in the middle of all this, even you feel
a twinge of consciousness to get your
house in order and this inevitably leads
to the question of getting life
insurance. So let's take a look at that
item on your checklist. Life insurance
after having a new baby.
This is actually one of the most common
reasons people contact us to purchase
term life insurance. It's actually a
retty good reason to get life insurance
protection so let's first confirm that
need. There's always the question of
whole versus term but we have exhausted
in multiple articles the reasons for
term in almost every situation. This
situation is no different especially
since we can pick a term which accounts
for the baby's potential dependency and
need on his or her parents financially.
Let's talk about what term to choose for
a new born baby. The standard term
limits that seem apply are 20, 25, and
30 year term life insurance. 20 will
take a child halfway through college
which is a good starting point. It at
least accounts for the majority of
his/her upbringing which is critical.
It's also addresses 2/3rd of the life of
a mortgage at which point, most of the
mortgage is now paying off asset and
some creative financial refinancing can
greatly reduce your monthly mortgage
payment in a pinch. 20's a good place
to start with the only downside being a
lack of funding for college.
College is incredibly expensive and will
only become more so. College probably
runs around $30K now and will likely
double 20 years from now in real dollar
terms. That's per year by the way...not
the entire college career. It would be
depressing for a child to suddenly have
to stop college due to an unfortunately
event that eliminates funding for
college. That points more to 25 year
term life. This should cover not only
undergraduate but graduate school if
needed. It's harder to argue the kick
up to 30 years but that's personal
preference ultimately. We keep hearing
about a longer dependency period for
kids these days as they come back home
after college to establish their
careers. People usually have strong
feelings (Hell NO!) either way so you
have to evaluate the difference in cost
between 25 and 30 to determine which way
to go.
For
a new baby, the amount of term life
insurance protection partially depends
on a few factors...your annual costs,
annual income to replace, and monthly
budget for life insurance premium.
Ideally, you replace 100% of your
current income for the required period
of time taking into account mortgage and
other debts currently help. Obviously,
you have to be able to afford the life
insurance so the monthly budget
ultimately dictates for how long and
how much coverage you should get. These
guidelines should hlep you pick term
life insurance in repsonse to a new baby
on board. Now if only we could solve
the sleep issue. |