There are countless things to consider and evaluate when you are going to become parents. In addition to all of the new furniture purchases, college planning, budget changes, and baby-proofing, there are two very important things that new parents need to review – their life insurance and estate plan.
A recent article in The Kansas City Star, titled "Money Matters: Two things that new parents should not put off…but usually do," lists several items that new parents should consider when examining their life insurance.
Childcare. If one spouse is no longer in the picture, odds are the surviving spouse is going to have to work outside of the home to keep paying the bills. Childcare can take a big bite out of your take-home pay.
Mortgage and Other Monthly Debt. This category can make or break many household budgets. The mortgage and regular monthly bills come due the same time every month without fail. The original article suggests that you purchase at least enough life insurance to satisfy the balance of the mortgage if one parent passes away.
College Tuition: Even if college is a long way off, the sooner you start saving, the better. Some parents carry enough life insurance to pay the full cost of four years of college for each of their children. Some parents also might have private school expenses before college kicks in.
In addition to these categories, The Kansas City Star also discusses income replacement and the importance of creating a will. A will is the most important thing you can do to ensure that your child has the care he or she needs in the event you are incapacitated or pass away suddenly.
Life insurance, your children's future, and planning for your own passing are heady subjects that few want to tackle. Nonetheless, it is essential you do so. Speak with your estate planning attorney and create a strategy that will make a big difference for your family’s future.
Reference: The Kansas City Star (August 14, 2014) "Money Matters: Two things that new parents should not put off…but usually do"