How Parenthood Transformed My Perception of Life Insurance

Matt Miceli

By Matt Miceli | August 22, 2019

As someone who has worked in the financial services industry for nearly my entire 15-year professional career — much of that experience in the life insurance sector — I’m probably more familiar with the world of personal finance than the average person. From graduating college through getting married, I felt pretty confident about managing our finances on my own.

But after my wife and I had children, two things became very clear:

  1. I needed to formulate a comprehensive financial plan for our family.
  2. Life insurance should become the foundation of that plan.

There are so many new expenses and moving parts to consider once you become a parent. Obviously there are big expenses in the short term, like daycare, and longer-term expenses like college tuition that you need to plan for. But the little stuff also starts to add up: clothes, activities, school supplies — even trips to the grocery store become more expensive. As the proud father of a 4-year-old and a 16-month-old, nothing is more important than ensuring my children will be taken care of if something happens to me.

With September being Life Insurance Awareness Month, there is no better time to share the story of creating my family’s plan and having our readers understand the impact that permanent life insurance can have in a family’s life.

Considering the Future

For some, the challenge is in getting started — they might prefer not to think about what might happen to them. But it’s vital to move past that initial resistance for the sake of protecting your children’s future. Nobody wants to think about the unexpected happening to them, but it brings me a lot of pride knowing that my family’s lifestyle can continue if something were to happen to me.

Once I started thinking about life insurance, the next step was to focus on how much coverage would benefit our family. That turned out to be an illuminating experience.

Consider all the expenses you take on with a child. Add them to the daily living expenses for the rest of the family. I think many people would be surprised by how much money their family might need if something happened to them — I know I was. A second child only adds to the calculations, as you potentially save for two college educations, while also planning for retirement.

Calculating how much life insurance you need is a matter of thinking through the amount of time you want to protect your family. If you’re 35 and planning to work until 65, planning for 30 years of income replacement could be a good starting point. But that’s where working with an adviser can help.

Young parents may be hesitant to reach out to an adviser. Maybe they’re embarrassed because they’ve been living beyond their means or think they haven’t been planning well enough. They might be confused by different aspects of life insurance, or the financial world in general, and are reluctant to acknowledge it. But that’s exactly why talking to a adviser can help you and your family create a protection plan — one that starts with your needs and goals, and gets you started on the right path.

Understanding the Versatility of Permanent Insurance

One foundational aspect of life insurance is the death benefit, which provides financial support for your family in case something happens to you. It’s important to have enough coverage to ensure that your family — and their lifestyle — will be protected for 20 to 30 years. Permanent life insurance coverage that lasts your entire life would be ideal. But term insurance that provides coverage for a set number of years offers another option, if affordability is a primary concern.

Another foundational element of life insurance, and one that is often misunderstood or overlooked, is the living benefits a policy can provide. For example, permanent life insurance plans build a cash value that can be tapped for any purpose — paying for college, starting a business, buying a house, providing tax-free retirement income.*

That combination of protection (if needed), and availability of cash to help fund expenses over a family’s lifetime makes life insurance more versatile and flexible than other financial products. I’ve heard someone refer to permanent life insurance as the “Swiss Army knife” of financial planning tools, which is a perfect analogy.

Protection and Peace of Mind

If there’s one bit of advice I can give to new parents, or families that are growing, it’s this: start your financial plan now. Understand the critical role life insurance plays in a comprehensive financial plan and find an adviser who can help you with your life insurance needs.

After the baby arrives, it’s so easy to get distracted by other priorities, as a new parent. Time moves incredibly fast. My oldest daughter just turned four years old last week — the last year went by so fast, it felt as if she skipped being three! That said, if you don’t carve out time to address your financial goals, before you know it, 10 or 15 years will go by. Make sure you and your spouse are on the same page about coverage by having open conversations. An adviser can then help assess your ultimate needs and goals, as well as assist with the many other financial considerations that come with a growing family.

Personally, I feel much more comfortable that my financial plan is complete because it includes a significant life insurance component. If something happens to me, I know my family will be taken care of. And if I’m fortunate enough to live a long and healthy life, I enjoy great peace of mind thanks to all the beneficial options my permanent coverage will provide in the future.

*Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Policy must not be a modified endowment contract (MEC) and withdrawals must not exceed cost basis. Partial withdrawals during the first 15 policy years are subject to additional rules and may be taxable. Policy must not be surrendered, lapsed or otherwise terminated during the insured’s lifetime.

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