In a previous article we covered insurance protection as a single. For a new family the circumstances are very different. With young dependents and possibly even a spouse that has given up her career to raise the family it is expected that the financial situation of the family has changed significantly and so has the need. Whatever the change I think one thing is very clear and that is the need to take another look at your unique set of circumstances and assess whether the policies that you already have bought as a single are adequate for you now.
Protection for yourself
As a single, if you took some insurance coverage it may be for a smaller amount. Now that you have a family you may well be the sole breadwinner. If an unfortunate event were to happen to yourself, you will want to ensure that the family will not have any financial worries if you are either unable to work or worse than that, you are gone.
Protection for you family has now become increasingly important. Coverage for the spouse and the children is essential because if you are faced with an unforeseen event and one of your family members needs urgent medical attention then the bills could cripple your finances if you do not have any cover. Of course it would a non option to forego the treatment so no matter what, your family member will get the treatment. Is just a matter of who pays for it. You or the insurance company.
How much coverage is enough? This will not be an easy question to answer and everyone may have a different answer. You need to examine your expenditure now and think what the expenditure could look like in the future. It could also be worth trying to project your income in say 5 or 10 years time and insure a multiple of that earnings level. Say 5 times or 10 times. Of course the higher the multiple the greater the risk for the insurance company and the more expensive the premium will be but is really up to you to decide on how much you think is enough for you and your family
The amount spent on insurance will depend from family to family. If a family is risk averse they may want to choose more cover and conversely if they prefer to take the chance then they may go for less cover. Probably a better way to look at this is to identify what are the areas in which a family could opt for insurance cover and then decide which types of risks they wish to cover. They could also set aside a budget for insurance and use that to allocate to the various different kinds of insurance.
While it may seem unnecessary to buy life insurance for a child consider this. If you yourself have a medical problem and are concerned that it may be passed down to or affects your child then in the future your child may find themselves uninsurable and suffer as a result. The insurance company is likely to consider insuring the child as it is a much lower risk and therefore easier to accept.
The other types of policy that may be available is one that covers the entire family so no matter who in the family needs the treatment, the insurance protection will cover it.
Disability insurance should also be considered because if you as the sole breadwinner were to be permanently disabled, it could impact your ability to continue in your current job. Not only would your income be affected, but your expenses would also go up because you may need professional help to perform basic daily duties
Critical Illness insurance is another type of cover that is important. This would cover a disease that is in the list of conditions set out by the insurer and if you were to be diagnosed with one of these then you will get a pay out. In some cases you do not even need to wait until you are gone for the family to get the pay out. It could be before that. An example of critical illness is cancer in which there are different stages. You can have early stage critical illness coverage where it pays out even if you are diagnosed early and you are cured.
No matter what the family decides on the level of cover and they type of cover it is advisable to seek the guidance of a professional financial advisor who can help you assess your needs and requirements and make the recommendations of suitable products. This article is only a high level guide and not intended as advice.
You should just have the peace of mind that no matter what unfortunate event occurs, you will not have to suffer from the financial aspect too