The Dos and Don’ts of Life Insurance for Moms
If you’re a mom, you must prepare to meet your children’s needs even after living the earth. While no one wants to ruminate on doom and gloom, securing their future with life insurance is one of the best ways to achieve lasting peace-of-mind.
However, maybe you shy away from purchasing coverage because the process seems complicated, even intimidating. Knowledge is power — once you understand the following dos and don’ts, you’ll have the confidence to find the plan your family needs.
1. Do: Know You Need Coverage
If you had asked many moms their plans for the summer before March of 2020, you might have heard answers like, “take a family theme-park vacation,” or, “sign the children up for swimming lessons.” What was it poet Robert Burns always said about the best-laid plans?
Bottom line: While you need to chart a course, in reality, you don’t know for sure what’s going to happen to you two short hours from now. A wayward meteor could mistake you for a dinosaur — unlikely, but theoretically possible. What will your children do if you suddenly exit stage right permanently?
2. Don’t: Put It Off Until Later
Insurance companies use actuarial life tables to determine your chances of dying before your next birthday. If you guessed that both risk and rates increase as you age, you win first prize at the county fair. Locking in an affordable monthly premium when young protects your family and represents wise long-term planning.
3. Do: Understand How Insurers Price Premiums
While age is a primary factor affecting your rates, your health and the type of policy you select also influence the price. If you have risk factors such as smoking or chronic illness, expect your premiums to increase. You could also pay more if you enjoy hobbies like base-jumping — remember “Along Came Polly?”
Whole life policies cost more because they build cash value — more on that in a bit. However, your premiums remain fixed for life unless you increase or change coverage. Term policies remain stable for the allotted time frame — usually 20 years — but you need to start over at an increased rate.
4. Don’t: Assume You Can’t Afford Anything
Times are tough. Wages haven’t kept up with inflation for decades, and businesses continue to shutter due to the COVID-19 pandemic. If you lost your job or recently took a salary cut, you might think, “I can barely cover rent. How on earth can I afford another monthly bill?”
However, there are many types of policies available. Term works for many, but if you have medical issues or enjoy a stogie on occasion, you can also investigate guaranteed life or final expense insurance. While neither pays as generously as other coverage types, they provide some padding against the unexpected.
5. Do: Name a Responsible Adult as Beneficiary
You can’t stand your baby’s daddy, and you barely speak to your mom. You don’t want them to profit off your death. Pause, take a deep breath and consider whether they would protect your children’s best interest even if you have a contentious relationship. If so, consider naming them.
6. Don’t: Appoint Your Newborn Infant
Here’s why you don’t want to name Little Johnny as primary. If 100% of your life insurance proceeds go to your newborn infant, your child won’t see a dime until they turn 18. A lot of trauma can happen between as the money goes to a court-appointed legal guardian, and state law limits how they may spend the funds. That’s why it’s better to select another trustworthy adult, even if the mention of their name makes you scowl.
7. Do: Review Your Policy Annually and Share the 411
As your child nears the age of majority, you may wish to name them as primary. However, that’s not the only reason to review your policy. Did one of your kids receive a costly medical diagnosis? Has your lifestyle improved considerably, and you don’t want your children to return to the school of hard knocks? Let all stakeholders know — after all if you think they’re after financial gain, why name them as beneficiaries?
8. Don’t: Leave Your Policy Paperwork Moldering in a Drawer
It’s unwise to rely on an ouija board to tell your loved ones where your policy paperwork is after you die. You should keep your life insurance info with your other financial documents so that others can locate them without a battle. You may wish to invest in a safe deposit box if your beneficiary attends college in another state and doesn’t know where, “under your sewing basket,” is.
Learn the Dos and Don’ts of Life Insurance to Protect Your Family
As a parent, you need to know the dos and don’ts of life insurance to protect your family. Now that you have the insight necessary, please, consider covering your child’s future today.