New parents & life insurance: Make sure you buy only what you need

marsha-woelber-headshotBelow is a guest post by Marsha Woelber, a Partner at Independent Investment Services, LLC/Securities Offered through LPL Financial, Member FINRA/SIPC.

Marsha does occasional posts on SouthernMamas about  becoming financially savvy.  To read her previous posts, click here.

Parents-to-be have many exciting decisions to make in preparation for their baby: nursery decor, furniture, registry, baby names and ….life insurance. Insurance confuses most new parents; the terminology, numbers, and flurry of adjectives leave them baffled, even after they purchase a life policy. Below I’ve attempted to give you a basic understanding of why you need insurance, what kinds you can buy, and what to watch out for.

Q: Why do I need life insurance?
A: Life insurance protects the family in the event of death of a key money-earner. Generally, you need one policy for each parent, regardless of whether both parents are working. The premature death of a stay at home Mom can be just as financially devastating as the death of a working father: if the Mom dies, the costs of full-time child care factors into the equation. Life insurance gets more expensive as we age – the idea is to buy your policy when you are young, and “lock-in” cheaper premiums.

Q: How much life insurance coverage do I need?
A: Start here: 5-10x salary + mortgage + other major debts + college tuition for kids. Each situation is unique; make sure you and your financial advisor are thoughtful about this number.

Q: How do I decide what type of insurance to get?
A: This is where it gets tricky. Generally, there are two types of insurance: Term and Whole.
Term insurance works like auto or homeowners coverage: If you die while the policy is active (the ‘term’), the beneficiary gets the amount for which you’re insured. Common policies provide coverage for 10-30 years. Term is useful where the need for life insurance is temporary – like until your mortgage is paid off or your children finish college. This makes sense for most young families because it covers a set period, with affordable premiums. Your term policy can carry the option to convert to a whole life policy, a wise idea for those who want lifelong coverage.
Whole insurance provides a guaranteed death benefit for a guaranteed period of time. The policy’s life is intended to be longer than the lifetime of the insured. Premiums for this type of insurance are higher.

Q: I have a life policy through work, do I need more?

To read the answer to that question and the rest of this guest post in its entirety, click here.
Please email/call with questions: Marsha Woelber;, 912-650-2852.

Marsha Woelber is a Partner at Independent Investment Services, LLC/Securities Offered through LPL Financial, Member FINRA/SIPC. She can be reached @ or 912-650-2852.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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