Raising a Family

Raising a child is one of the great joys — and challenges — of life. And since it is impossible to predict the future, it is incumbent upon you to make certain that your family is properly protected.

Key Issues

As a parent, you'll have new financial responsibilities. Begin by reviewing and estimating future expenses. You may need to consider the costs of buying a new house or funding an education.

Now is also the time to re-evaluate your insurance coverage. A life insurance policy can be an important part of a family's safety net. Whether you buy a permanent or term policy, life insurance can help protect your family's future.

Make sure you have enough coverage. There are several strategies for estimating the amount of protection needed, including:

  • Income: your insurance need is estimated to be six to eight times your gross annual income.
  • Income plus expenses: your insurance need is based on five times your annual gross income plus your outstanding debts, such as mortgages, credit cards, and loans.
  • Estate preservation and liquidity: you calculate the insurance needed to cover expenses at the time of your passing, and provide additional tax-free income to your beneficiaries.

Also, give careful thought when naming your beneficiaries. Most insurance companies allow a primary and contingent beneficiary and it is advisable to name both. Be sure to also review your investment, retirement, and estate plans periodically.

Options to Consider

Term Life Insurance
If you have young children, this is the time when life insurance is most important. It is appropriate to consider coverage for both parents during these years. This is when many families purchase term life insurance to provide protection until the children are grown. Learn more.

Universal Life Insurance
If you need the security of permanent life insurance protection, universal life may be the right choice for you. Unlike term coverage, universal life can build cash value over time that may be used to fund important expenses later in life.1 Learn more.

1 Fluctuations in interest rates and/or policy charges may require the payment of additional premiums to keep the policy in force.

Transamerica Life (Bermuda) Ltd., Transamerica Life Insurance Company, and their authorized representatives do not give tax or legal advice. The material provided is for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must rely solely upon their own tax and/or legal advisor regarding their particular situation.