Life Insurance for New Parents – how much is enough?
With babies come the need and the topic for this post, life insurance for new parents. Since the day we got married, everyone has been asking… So When are you going to have kids? For Jasmin and I, that task was not as easy as everyone imagined.
Purchasing Life Insurance for New Parents – how much do I need
A quick answer is 10 times your annual salary. After you have multiplied by 10, you want to make sure that there will be enough. You must feel confident that your dreams of education, lifestyle, and the basic needs will be met. The goal in purchasing life insurance for new parents is to ensure that your family can fulfil their dreams as if you were alive with 10 times your annual salary.
For a more detailed calculation you will want to do a actual needs Analysis. Leave a comment below or contact us for a free Needs Analysis worksheet. A needs analysis should cover at minimum 4 basic areas.
- Income replacement
In our blog post we talked more about a DIME Needs Analysis.
Moreover, you need to account for immediate cash needs such as final expenses, all debt (mortgage, personal loans, car loans, and credit card debt), and replenishing your family emergency fund.
There will also be monthly income needs that will be detailed in the income replacement. Here is a short list of these items:
- Utilities (phone, electricity, gas, trash, sewer, water, internet, cable)
- Children expenses (School Supplies, fees, clothing, lessons, sports and activities)
- College savings
- Property taxes
- Insurance premiums (auto, life, health care, dental)
- Car maintenance
It’s For Love – Life Insurance for New Parents
I truly believe that securing the right amount of insurance is a loving task. To know that you have planned for your unlikely death is a message of love. If you die with life insurance, you are sending a message of caring, support, and encouragement.
Enough Life Insurance + Death = Love
I recall a stubborn client getting very upset when I showed him that his actual need was $765,000. He argued that no one needs that much money and certainly not his wife.
The conversation went further down this dark hole. He then said something that will forever resonate in my mind. He claimed, “if my wife were to have that much money, she would spend it all. Then what if she remarries… I don’t want some other guy to benefit from my death or marring her for money. I don’t want some asshole raising my kids!”
I hope you are in disagreement.
If you think like this ass hole, change your thinking. Life is hard enough, tougher without a parent. Again, Life insurance is for love. Purchasing life insurance for new parents is for solving for confidence so you may live worry free or die like a loving champion.
Here is what is more likely to happen.
When looking for a solution, like Life insurance for new parents, solve for the right amount. Your spouse will have a safe home with no debt. Your children will never have to worry about where their next meal is coming from. They will have college plans in place.
They will respect you more because their parents faced death with love and not fear.
Your spouse will not have to remarry because of need. In the case above, she will not be forced to remarry for shelter, security, or money. Rather, if your spouse is to marry after your death, it will be out of love.
Insurance for Children
In addition, a decision needs to be made on purchasing insurance on the children or choose to be self funded in the event your child death (very unlikely).
Our daughter, Little Miss Fedorable, was born about 5 years after getting married. So after several miscarriages, ectopic pregnancies, molar pregnancies, you name it… we gave birth to our first child. Yes! We had an uphill battle but we never backed down.
Since that day of a successful pregnancy and home-birth, we have been asking her, “when is your brother coming.” Naturally, we had set our intentions on having a baby brother and looked forward to our family growing.
Meanwhile, we understood that we needed more insurance than a simple policy to cover our mortgage and student loans. We each had $250,000 in coverage. To some this may seem like a lot of coverage. In reality, if you have kids, it might not be enough. For the Fedorables, it was only a quarter of what we needed.
As I demonstrated above, there were a few new considerations that need to be factored in like income replacement, and education.
Today we each have well over 1.2 million to cover our need. Doing a DIME Needs analysis, and our recent purchase of a new home, and great health, we are looking into redoing our policies.
You may also want to review best life insurance options for children if your children are young. As a grandparent or parent, you are best to have a solid life insurance plan in place for your family, children and your grandchildren.
Wonder What life Insurance for new parents is Best?
Feel welcome to reach out and ask us about solutions for Life Insurance for new parents. We do our best to respond to questions via email within 24 hours. While I can’t guarantee we’ll be able to help everyone, we do our best to at least get you the answers you need. We do this so you don’t make a long-term commitment to a complicated financial product you might later regret. Simply reach out to us or leave us a comment at http://lifeinsurancetoolkit.com/contact/
Should you need to ask specific questions or need some one-on-one guidance (for free and with no pressure, of course), feel welcome to reach out by clicking here. We’d love to hear from you.
Jose, Hoser, Joe from the show