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A new baby

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Scenario #1 for Term Life - A New Baby

It's a common reason to check out term life

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.   



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DISCLAIMER  - Information provided on this page is intended as a general overview.  Your situation regarding life insurance may be different and we strongly recommend speaking with a license life insurance agent. This information is solely the opinion of etermlifeinsurancequote.com and may not be suitable.