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Buying life insurance – when is the right time?
One common financial instrument that is recommended for new parents is life insurance.
There are many different types of life insurance policies out there to consider such as whole life, term period certain life insurance, universal life insurance with underlying investments and cash value, etc etc… This can be a bit overwhelming for new parents looking for the proper life insurance policy.
Furthermore, the insurance premiums can be very expensive and cost-prohibitive for young parents.
The key is finding a life insurance policy that is a good fit for your family’s financial situation without overextending the budget.
I recommend that new parents consider purchasing a term life insurance policy that will cover the amount of time the parents expect their kids to be financially dependent. Another important consideration is the expected timeline of paying off large debts such as a mortgage.
Choosing a death benefit amount to apply for is a little more tricky. There are many things to consider such as the cost of your family’s lifestyle, the ability for your family to replace your income after you have gone, the affordability of premiums, etc…
I recommend that young parents discuss these variables with a professional financial planner that can point them in the right direction. One simple thing to remember when it comes to life insurance is this: you buy life insurance with your health more than dollars and cents.
It is much more affordable and easy to attain life insurance at a young age while you have your health. Talk to a professional and start implementing life insurance in your financial plan. Start small and build on it if you have to, but do not wait.