It's 3am and all is quiet in the house except for the ear-piercing cries of your precious bundle of joy. Are they burpy, hungry, or looking for a new nappy? We understand it's a huge life-changing event becoming a parent. Suddenly you have a child that depends on you to keep them safe and ensure they have everything they need to live a happy and healthy life.
As you busily navigate through a host of important decisions and responsibilities in your new role as parent, one of them might be whether it’s a good time to consider getting - or reviewing your existing - life insurance. And what better time to have a good think about this as you gently pat your little one off to nighs-nighs? (for the 47th time that night)
What are some reasons for families to consider life insurance?
Life insurance can help your family stay afloat financially and help ensure your children are taken care of if you are no longer there to support them. The policy is designed to pay a lump sum to your family or estate if you pass away, which can ease the burden of paying expenses such as your rent or mortgage, living costs and childcare.
For many parents, having a plan for how their young children will be taken care of if they pass away can provide a lot of peace of mind. You can talk with a financial adviser about how life insurance can be used to support your family if you are no longer around.
Some of the things a financial adviser can discuss with you is what expenses you currently have and whether your family would be able to cover those expenses on their own if you weren’t around. Or vice versa.
Does life insurance work for your family’s budget?
Having children can introduce new financial pressures into your life. If you are considering life insurance, one of the main questions you might have is how to fit it into your budget.
While there is no one-size-fits-all approach to choosing or structuring life insurance cover, a financial adviser can help you to balance cost - by assessing the amount of cover you may need and how to structure your cover in the most effective way for your individual situation.
Some of the things a financial adviser can discuss with you are how much debt you have, what bills and living expenses you would leave behind, and how you would want your children cared for and educated.
Which parent should get life insurance?
Often new parents can be reduced to one income if one parent chooses to stay home and care for the new addition to the family. If you’re in a situation where your family is financially dependent on the income of a sole working parent, it may seem to make sense to insure the working parent.
But it’s also important to consider how losing a caregiver would impact your family. Would someone else need or want to stop working to take care of your child? Would you have family support, or would you need to pay for childcare?
It’s worth thinking through these different scenarios to understand how much insurance you might need to cover the contributions of each parent or caregiver. That can be the value of seeking financial advice that is relevant to your individual situation.
Our insurance partner
AA Life Insurance policies are brought to you by the New Zealand Automobile Association Incorporated and underwritten by Asteron Life Limited.
Financial strength rating
Asteron Life Limited has been given an "A" financial strength rating by S&P Global Ratings Australia Pty Limited.
Financial advice
Our website provides general information about our products and services to help you make choices when it comes to protecting the things in life that really matter. The information doesn’t take into account your specific financial situation, needs or goals and is not intended to be financial advice.
If you'd like to receive financial advice, you can get professional advice from a registered financial adviser.