Here are a few things to consider.

1. Don't get life insurance for your baby
There is no need for it and if someone tries to sell it to you they are taking advantage of your emotions. One rule of life insurance - get it only if the loss of the insured person would have a financial impact on the surviving family members.

The main argument that you might hear to justify insuring your child's life is to make sure they can get cover in the future (getting insurance when healthy is easy - if they develop a health problem later on in life it could make insurance hard to get or very expensive). This isn’t a great argument. The chance of a healthy child developing a health issue that stays with them until he or she's an adult is not that high. What's more, unless you insure your child for a large sum right from the beginning, the level of cover selected would probably be tiny compared to his or her actual needs in the future.

2. Get your will sorted.
Even if you don't feel you have much of an estate yet, get your will taken care of. Remember that your will is not only the place for you to say what you'd like done with your possessions, but it's also the place for you to appoint guardians for children.

3. Don't spend more than you have to on baby costs
No doubt you know this already, but there's nothing wrong with a little repetition when it comes to saving money! We all know kids are expensive, just keep in mind that a lot of the things you buy won't be used for that long - especially clothes. And, since a lot of costs come before the baby is born, develop a spending plan (sounds much better than budget doesn't it?) before you buy.

4. Work vs stay-at-home (it’s not just about salary)
Obviously more than just financial factors determine this. But on the financial side of things, don't just look at the salary of each partner, think about any benefit packages too. These can add up significantly, so look at which of these you need and the cost of replacing them. Also, if you are weighing up returning to work, don't forget to factor in costs such as transport and day care.

5. Don't let your own retirement savings get sidetracked.
You are still going to retire one day - and that day's not getting any further away. If you're choosing to take a break from saving make sure you know how you're going to top up your savings later. Or, if you're able to, just keep on saving. You can still take advantage of many of the benefits of KiwiSaver even if you’re no longer working.

6. Have life insurance that's based on your situation.
You’re now financially responsible for someone other than just yourself! So how much life insurance to get? In the olden days you would probably have been advised to take your annual salary and multiply it by some magical number (some would say 10, others 15). This would give you the correct amount of cover. While this method might have been great for the life insurance company, as you might imagine the results were not exactly tailored to each individual. Nowadays, if you ask an adviser: "How much life insurance do I need" their answer should be: "Depends". Once you've completed a fact finder that gives you a chance to tell your adviser about you and your situation the answer should be pretty clear. So, it's not rocket science and no magical numbers are needed - your situation will determine the life insurance sum that's right for you.

7. Find out about income protection.
Since statistically it's more likely that you'll become ill or injured than die unexpectedly, income protection insurance is something that all parents ought to look into. And if the thought of relying on the state to support you and your family in the event that you become very sick or disabled worries you, it's even more important.

Warm regards,

Conor

Conor Sligo
Insurance Specialist

www.inform.co.nz
0508 INFORM (46 36 76)

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