Having a first baby is a steep learning curve. One of the first things new parents may have to learn is how they can adapt to survive on minimal sleep. It’s also expensive. Cots, prams, car seats and other paraphernalia all need to be bought to keep the newborn safe and healthy. Putting these together means that new parents can often find themselves spending money and missing out on important purchases.
A Savings Account Versus Life Insurance
Parents may open some form of savings account for their new arrival. In itself this can be a sensible option. For example Junior ISA’s provide a tax-efficient way of saving for when your tiny baby becomes a full-size, 18-year-old. Few parents, however, give serious thought as to what would happen to their child if they were to die in the meantime. While it’s fair to say that we are far more likely to live to a ripe old age than, say 50 years ago, sadly there is no guarantee. Accidents happen and so do illnesses. Younger people can and do die, and when they do, the consequences can be particularly severe. For new parents, who are caring for a child in the most physically demanding period of its life, the death of one or more parents can be catastrophic. Savings accounts may be a useful way of planning for the future, but life insurance will take care of financial issues in the here-and-now.
Life Insurance Needs To Change With Your Lifestyle
Parents who have bought a house prior to having a baby are likely to have life insurance already. It’s a condition of many mortgages. For some mortgages however, the only requirement is to be able to repay the outstanding balance. When a baby comes on the scene, the new parents have to think seriously about how to ensure their child’s welfare in the event of the unexpected death of one or both of them. This means thinking well ahead until the end of the child’s full-time education. It needs to cover everything from childcare fees in the early years to school trips in later childhood and university fees in early adulthood.
Peace Of Mind Can Cost Less Than Toys
New parents may find themselves buying baby items which are hardly or even used. The cost of these items could well cover the cost of life insurance for the first year of the baby’s life. For healthy, younger adults an acceptable level of cover could be priced as low as a few pounds a week. This is usually more than achievable for people who exercise good money management and keep a firm grip of the family finances. Of course, life insurance only pays out in the event of a death and since both parents will hopefully live to see their baby reach adulthood, it can help a lot to have a financial plan in place to ensure that there are funds available to them when they reach school-leaving age. Getting advice from a financial adviser can help put your child’s future life on a solid footing before they have even taken their first steps.