Life insurance for new parents

Posted on: 25th April 2021 in Insurance

Becoming a parent is a defining moment for every adult person. Where your financial situation is concerned, saving enough money to ensure your children’s welfare will become the top priority. That’s why life insurance for new parents should be one of the things they ought to consider. Taking out a life insurance policy ensures that your loved ones would be protected should the unthinkable happens.

Why new parents should have life insurance

Life insurance works as a safety net against life’s ups and downs. As soon as you start your life as an adult, you should consider adding life insurance to your financial plan. We have all listened to stories about people having to deal with unexpected health conditions or even sudden deaths, which forced them to change their way of life or put them in a difficult financial position.

Life insurance helps to solve this problem for you as the insurer is responsible for paying out a sum of money that would help cover any unexpected expenses for those you leave behind. Taking out a life insurance policy for new parents is important as you’d ensure that your husband or wife and children would be able to cope with any potential costs.

New parent? Plan ahead

Some say that life never happens exactly as you think it would. The act of planning makes it easier to deal with what’s around the corner. A part of the plan is and will always be life insurance. With life insurance, you ensure that people who need you won’t be at risk in the event of your sudden absence or inability to help them. Such people could be your wife, children, grandchildren or other close relatives who are a part of your life.

Apart from the usual expenses, a mortgage or financing an education plan for your children could turn out to be a heavy burden for people who don’t have the same income as yourself. Speaking to an independent financial adviser would help you find out how much life insurance you need and what you would need to pay in the form of a monthly premium to cover those needs.

How much life insurance do you need as a new parent?

This is one of the first and most important questions that come to mind when we think about life insurance. Life insurance is not a “one size fits all” thing. Reading advice available on the internet, you might have seen the rule of thumb which says that you need life insurance equal to ten times your income.

However, this isn’t always the case. Generic advice that isn’t based on your individual circumstances could create problems. A qualified independent financial adviser would be able to provide tailor-made advice and guidance.

Calculations should be based on how much money your loved ones would need to continue their way of life as it is and, of course, cover costs such as mortgages, college tuition fees etc. A qualified adviser would be able to help you make the right decision, minimising the possibility of a mistake that could prove costly.

Whole-of-life or term-life cover?

Permanent or whole-of-life insurance gives you coverage for your whole life as long as you pay the monthly premium agreed on the contract. A permanent cover allows you to enjoy benefits such as helping make downpayments on a new home, pay your child’s college education costs, supplement your retirement income etc. This specific type of insurance policy usually has high premiums.

Term-life cover runs for a fixed term that you specify when you take out the policy. If the unthinkable happens during that term, the insurance provider would have to make the payout. Term-life cover requires lower monthly premiums. As a result, this type of policy is preferred by people who would like a more affordable solution.

Life insurance for new parents and Holborn

Life insurance for new parents is important as it would help preserve the family’s lifestyle and cover its needs if an unexpected event happens. A life insurance policy minimises the financial consequences while it could be useful as a long term financial planning tool.

If you feel that you don’t have the necessary knowledge to judge which solution would be suitable for you, our qualified and experienced independent financial advisers at Holborn are ready to help you. Get in touch with us today and secure the future of your loved ones.