Being a parent might be the best job of them all. But one of your biggest concerns is likely finding ways to protect your children, both today and in the future.
One commonly overlooked piece of the puzzle is life insurance.
Life insurance protects your loved ones against financial hardship in the event of the unexpected. But many parents – and mothers, specifically – still don’t have enough coverage or any life insurance at all.
So as a parent, how much life insurance is enough? Here are 3 things to think about when it comes to life insurance.
1. Loss of income
When it comes to life insurance, the first thing parents should think about is any impact to income, in the event one or both parents pass away.
Remember, life insurance can help cover mortgage payments, household maintenance, and even that yearly family vacation – so that your children’s lifestyle doesn’t have to change if something unexpected happens to you.
As a general rule, the value of a life insurance policy should typically cover ten times your salary.
2. Everyday costs and responsibilities
Whether you’re married, single, or a stay-at-home parent, caregiving duties and household responsibilities take up a large chunk of parenting life. Parents should also consider the cost of non-income-related expenses when considering the value of their life insurance plan.
Childcare, cleaning, cooking, and household management are all much-needed contributions to a functioning household. If one or both parents were unable to fulfill these responsibilities, there would be a huge replacement cost.
3. Future costs and expenses
As a parent, you likely set aside money for your children’s future, to cover things like post-secondary education or major events – like weddings. However, what would happen if you were no longer around to continue saving for those costs?
When evaluating your life insurance policy, it’s also important to take into consideration future expenses when it comes to your children. How would you like to support your children financially in the future?
This can help make sure you’re choosing a policy that best supports your children, long-term, in the event of the unexpected.
Picking the right policy as a parent or guardian
As parents, one of the most important things you can do is put an end-of-life plan in place. That includes making a will and choosing the right life insurance policy for your family.
Not sure where to start? The best thing to do is to get on the phone with an expert to go over your current situation – both at home and at work – and discuss your future goals and protection needs. They can advise you on the best life insurance solution for your unique situation.
Here’s a quick overview of what type of life insurance is right for different stages of parenting:
- If you have young children, what you may need is a term life policy; it can help cover your mortgage, other debts, as well as the cost of raising little ones before they move out of the house.
- If you want to give your teen or young adult children a leg up, a participating 20-pay whole life plan allows you to dip into their cash value to help pay for a future wedding or down payment on a home. (And payments stop after 20 years!)
- If your kids are grown and you’re approaching retirement, you may want to ask about a term-to-100 plan; it will help make sure that final expenses are paid off and help you leave a legacy.
Serenia Life helps Canadians plan for the future and protect their loved ones with customized life insurance and investment solutions. Visit serenialife.ca to learn more about life insurance.