Q: What is the most important thing to financially prepare for the arrival of a baby?
A: The most important financial step to prepare for a new baby is to ensure financial security for your child and remaining family members, in the event of an unexpected passing of a family’s wage earner.
Why life insurance as a financial step to prepare for a new baby?
The proper term life insurance policy can accomplish this – and much more – very inexpensively. What to look for in a policy: The policy should be a “convertible” term life policy, which will allow you to convert it into a dividend-paying whole life policy all at once, or in pieces, as your income grows.
These policies can ensure a secure financial future for you and your family by providing you with a guaranteed and predictable income in retirement – without the risk or volatility of stocks, real estate, and other investments.
When properly structured, the policy can also enable you to become your own source of financing and reduce or even eliminate the control banks, credit card, and finance companies have over you.
There are little known, specially designed whole life policies available today that have options added on to them that make your cash value in the policy grow up to 40 times faster than a traditionally designed policy would. This allows you to use it as a powerful financial management tool from day one. The average family could increase their lifetime wealth by $500,000 or more, simply by financing their cars and vacations through the policy, instead of leasing, financing or directly paying cash for them.
Adding on a “child insurance rider” costs almost nothing, but automatically provides money to cover burial expenses for a child (once they are born), if the unthinkable were to happen.
Be sure to consult a knowledgeable advisor who can advise you on the best way to structure the policy and to determine who should be the insured. While, not very exciting, this insurance is the best financial step to prepare for a new baby.
Pamela Yellen is a personal finance expert and author of the New York Times best-seller, “Bank On Yourself.” Her financial advice is also available at www.BankOnYourself.com.