Life Planning With Kids: Don’t Underestimate The Need For Insurance Coverage And A Will
Being a parent is an exciting adventure, but it comes with a lot of responsibility as well. As your family grows, it can be difficult to know what steps to take to ensure that your children will be taken care of in the event that something happens to you. While many people hesitate to face life planning decisions while they are young and healthy, experts recommend tackling this process sooner rather than later.
Evaluating your insurance needs is essential as you build your family
CNBC details that it is wise for people to take some time early on as they are building their family to evaluate their financial goals and make some plans for the long term. There are many areas to discuss when it comes to life and financial planning when you have children, but insurance coverage and estate planning are essential topics to cover.
If you do not already have a life insurance policy before having children, it is essential to get one as soon as you start building your family. Many people are able to get basic life insurance policies through their employer, but they do not always know how much or what type to purchase.
CNN notes that a good starting point is to purchase coverage equal to 10 times one’s current income. That is a solid basic plan, but some decide to purchase a policy worth significantly more than their current salary, perhaps more in the realm of 20 times their current income.
Don’t underestimate your family’s life insurance needs
Kiplinger points out that a simple ballpark amount in a life insurance policy may leave you with inadequate resources down the road. It can be helpful to consider some specific expenses ahead for your family and purchase insurance based on that. For example, you need to account for funeral expenses, remaining debts such as a mortgage and other loans, potential college expenses for your kids, and replacing your income.
You will want to consider getting life insurance on a stay-at-home parent as well. Policy Genius explains that life insurance isn’t just important when it comes to the primary breadwinner for the family. The loss of a stay-at-home parent may not lead to a direct loss of income, but there are costs in addition to a funeral that may arise such as child care, housekeeping, and other services that were unnecessary before.
Other types of insurance coverage are important to acquire too
In addition to life insurance, it is important to consider coverage like disability and long-term care policies. Consumer Reports indicates that disability insurance is essential for essentially everybody and they go so far as to say that it may even be more critical to acquire than life insurance.
This type of coverage replaces part of your income should you face a health crisis. Many employers offer access to disability insurance, but there are private options as well. These types of policies will typically only cover about 70 percent of your standard salary, so while it is critical to have, know that it will not fully cover your income in case of a serious illness or disability.
Don’t put off creating a will and estate plan
Other types of insurance like health and auto insurance are important to have in place as you tackle life planning and work to ensure your family is properly covered and secure. Not only are insurance policies important to have in place when you have children, but a will and estate plan are essential as well.
Learn Vest notes that a will details how your assets will be distributed in the event of your death and it will designate guardians for your children. Even if you don’t feel that you have substantial assets to address, putting this plan into place is critical to ensure your children’s future is secure. As you work on this plan, you may want to explore options like utilizing a quitclaim deed to handle home ownership issues and to ensure security and consistency for your family’s living situation.
Life planning when you have children is essential so that your family will be cared for if you become ill or pass away. Do not underestimate your need for coverage and take the time to put together a will too. You may face some difficult decisions as you put these planning pieces into place, but they are essential for making sure your child’s future is secure should something happen to you.
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