Collaborative Post
Becoming a new mum is arguably the most amazing yet terrifying experience any woman can have. You are bringing a bundle of joy home and wondering, “How am I going to take care of this tiny, adorable human forever.”
While it’s not possible to cater for them forever, taking out a life insurance policy can act as a safety net for your children should you pass away while they’re still very young. Depending on the plan, it can help to fund the mortgage, education, food, and even your funeral costs.
If you’re considering buying a life insurance plan, the following six tips below will guide you throughout the process.
Buy insurance early
Getting a life policy early can save you money in the long run because premiums tend to be more expensive as you age. As a result, the younger you buy life insurance the cheaper it will be for you.
Talk to a trusted advisor
Purchasing life insurance cover is an agreement that requires the highest standard of good faith. This means you need to give every vital information regarding the insurance including your health, family history and number of beneficiaries.
Luckily, you can easily find a trusted advisor today to guide you through the process and ensure you do not omit anything essential.
Decide how long you need coverage
There are two major categories of life insurance policies: term life and Whole of Life insurance.
With term life, your goal is to seek coverage for a specific period/term, usually between 10-30 years. After the coverage terminates, you could decide to renew for another term.
Most term life policies are level term, meaning the face value remains the same throughout the term. It’s the best option for mums looking for an affordable route to getting coverage for the children until they are likely to be living on their own.
On the other hand, the Whole of Life insurance policy is permanent and will cover you for the rest of your life. This plan is usually costlier than term insurance while it guarantees a payout as long as you keep paying your premiums as agreed with the insurer.
Calculate how much insurance you need
To determine how much life insurance to buy as a new mum, think about your kids’ financial needs if you were not around to support them. How much would the surviving kids or spouse need right now in terms of housing, daycare, nappies, etc. if you are not sure, you could review your bank statements to see how much you spend on average every month.
This can help you decide how many years of income you would like the policy to replace based on current financial obligations. A financial advisor at your preferred insurance provider can also help you determine a suitable coverage amount that makes sense for your situation.
Premium frequency
Another thing to consider when buying a life insurance policy is how often you are required to pay the premiums. Every life insurance company offers different guidelines for this such as paying the amount in a lump sum and regular intervals, e.g., monthly, quarterly, or annually. To avoid falling behind on payments, it’s important that you choose a payment plan that’s most favorable for you.
Naming beneficiaries
When buying an insurance policy, you need to name a beneficiary of the payout released by your provider upon your passing away. Most new mums will name their spouses or co-parents. However, it’s crucial to have a contingent beneficiary should anything happen to both parents.
This will be someone to manage the trust as per your instructions. We do not recommend naming your child because the life insurance company cannot pay out the money to a minor. If a minor is the listed beneficiary, the court appoints a custodian, a process that could take some time.
Conclusion
Don’t be part of the 18% of mums in the UK who are yet to take out a life insurance plan to protect their loved ones if the unthinkable happens. The good news for new mums is that the younger you start protecting your child’s future, the more affordable your life insurance premium rates will be.
Now is the right time to make this smart move to keep your growing family safe. It will lessen their burden and ensure they live happily even if you were to depart abruptly today.