When you are expecting to add a child to your family, you need to make important decisions about how to best protect that child’s well-being. One of those decisions involves the adequacy of your current life insurance coverage. Soon-to-be parents should evaluate their existing life insurance policies to determine if these policies will meet the needs of their growing family.

Three core areas of life insurance merit examination:

• Type of insurance — If you currently have term life insurance policies, you may want to evaluate if they still offer enough coverage. These policies provide life insurance protection for a specific period of time, but without an accumulating cash value. Permanent life insurance policies can provide protection for an individual’s entire life so long as the premiums are paid, and they accumulate cash value over time. With the addition of a child, cash value, which can be borrowed against to pay for expenses like college tuition, may be a valuable asset. Also keep in mind that your age, health status and the type of coverage influence what life insurance will be available to you, along with its cost. Therefore, it is a good idea to buy life insurance while you are young and healthy so as to get the best coverage at the best rate.
• Amount of coverage — The birth or adoption of a child brings to the forefront the issue of what would happen in the event a wage earner dies. Each parent should have enough life insurance to ensure that the family would be able to carry on financially in the event that something happened to the other parent. Many people mistakenly believe that a stay-at-home spouse does not need to be insured. However, if that person were to die, all of the tasks he or she performs, such as childcare, would still have to be done. Life insurance enables the surviving spouse to continue to work to support the family, by hiring someone to perform these tasks.
• Beneficiary — New parents should update their beneficiary designations after the birth or adoption of a child. Choose both a primary and a contingent beneficiary. This way, you will ensure that, in the event of your death, funds will be available immediately to care for your child. Without designated beneficiaries, the funds will become part of your estate. Expectant parents should talk to an insurance before their child arrives. Knowing that your family will be financially protected even if you are not around is one more way you can be sure that you have protected your child’s future welfare.

For more information, please contact the Cleary Insurance Group Benefits Department 617-723-0700.