Having a baby on the way can be exciting as you are preparing for his or her arrival. However, it can also be stressful as you start looking at the financial implications of expanding your family. I wanted to share some tips and thoughts on two big financial and legal decision you have to make: life insurance and wills.
Do You Have Life Insurance?
Life insurance comes with two major types of policies – term and whole. Each has it’s own pros and cons. You have to weigh for yourself what is best for you and your family.
Which Type of Life Insurance is Right for You?
Term life insurance will cover you for a specific amount in a specified time period, such as 10,20, 30 years. If you die after the term ends and you haven’t gotten a new policy, then you will not be covered. Between the two options, it’s usually much cheaper with premiums. We both have term life policies at our home.
Understand that a term life insurance policy doesn’t have a savings component to it. You can invest the difference in savings between the two types of policies and come out ahead. Term life insurance is an option to consider as you move towards becoming self-insured in the future.
Whole life insurance is a bit more complicated as it’s an insurance policy that contains some savings portion to it. For some people the benefit of this policy is the cash value piece to it. Some policyholders find comfort in having some ‘forced savings’ built in.
You have to sit down and decide which insurance policy fits your family’s finances better. When you have an idea of what type of life insurance policy you need, it pays to compare rates with different, yet reputable insurance companies.
Do You Have a Will Ready?
No one likes to think of the end of their life, but being prepared for it can ease the emotional and financial burden to your surviving loved ones. What do you ned to include in your will? Here are some ideas to get you started:
- Name Your Executor – Who is legally responsible to carry out your wishes? Think very carefully before selecting this person.
- Name the Guardian of Your Child(ren) – Another huge decision that you’ll need to really think through on. Make sure you check with the person to see if they are able and willing to handle this huge responsibility.
- Asset Distribution – Be as clear as possible on who gets what.
- Debt Repayment – Ease the difficult process by stating how you want final expenses and remaining debts settled. You can have one of your financial accounts designated to handle the transactions.
Using a will template as a guideline can help you get started, but you’ll still need to make sure all your bases are covered. You need to make sure that your will is valid in your state and that your will executor is able to follow through on your last wishes.
More Posts on Babies and Finances
If you’re looking at cutting your baby expenses, please check out some of my other posts on the topic:
Photo Credit: limaoscarjuliet