Why Insure a Baby? - Plus four things 20-somethings can do now to help secure their financial future.

by Holly O'Dell

We just had a baby, and my in-laws say we should get life insurance for her. Why would we want to insure a baby?

Boone Jackson, Thrivent financial representative, St. Charles, Missouri, says:

Whenever a member asks me this question, I share the story of my 1-year-old son, Liam. My wife, Jill, and I bought a life insurance contract for him through Thrivent Financial for Lutherans when he was 2 days old. Three months later, we learned that he had a disorder called neurofibromatosis. When we applied for additional life insurance for him, we were denied because Liam was considered uninsurable—and likely will be so for the rest of his life.

Our hearts broke for Liam. The good news, though, was that when we purchased the $50,000 life insurance contract, we signed up for the maximum guaranteed increase option. That means Liam will have eight opportunities throughout his life—whether that’s when he gets married, buys a house, has children or otherwise—to automatically increase the policy by $60,000 each time, regardless of his condition.

Purchasing life insurance for a newborn often is a sensitive subject, as no parent wants to think about a child dying. But I ask new parents to consider what expenses they would need to cover should their child pass away—funeral costs, time away from work, unforeseen medical expenses and so on. The cost to insure a baby is pennies on the dollar, and as Liam’s story shows, it’s a wise investment for your children, their future and your comfort.

I just got my first job out of college. What should I be doing now to help me financially in the future?

John Ungerman, Thrivent financial representative, Pottstown, Pennsylvania, says:

That first job out of college represents your first major paycheck. But for many, this time in life also means the start of significant debt as student loans come due and living expenses rise. To get a good start now:

• Put together some cash reserves. Do you really need that $5 latte a day? Review and revise your spending habits, and try to put at least $50 a month into savings. Aim to have at least three to six months’ income in reserve at all times.

• Start managing your debt. Consolidate student loans to lock in an interest rate. Consider whether you need that large monthly car payment—perhaps a used car would do. And don’t live off your credit cards. Pay off the balance each month.

• Put yourself on a budget. If you’re not sure where to start, a financial representative can offer you tools to help you set up a budget and stay on track.

• Contribute to your 401(k). Put in at least enough to maximize your company’s matching contributions. That’s free money you don’t want to walk away from. If your company doesn’t offer a 401(k), consider investing in another type of retirement plan, such as an IRA.