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Here are the 2 financial products you should buy after you have kids to ensure you have strong household finances and to build generational family wealth:
1) Life Insurance for Both Parents.
Kids are financially dependent on you for years. Your spouse may be too, once you have children. Life insurance protects your household finances if you or the other parent dies.
Having an adequate amount of life insurance will ensure your household and family will remain financially stable if you're not around.
On the other hand, not having enough life insurance could cause major financial challenges for the surviving parent and your family.
Your life insurance coverage should be enough to replace your economic value for years. This includes annual income, but also the value of unpaid work (caring for the house, stay-at-home parenting) that would need to be paid for if you weren't around.
2) Life Insurance for Your Children
This one might surprise you a bit but it is so valuable to buy life insurance for your children; valuable for you, for them and even for their children.
Here are just 2 of the many reasons why:
First, child life insurance is permanent insurance. You are buying it. This means that your child is insured for their entire life, and the death benefit is guaranteed to pay out. This is not the case with term life insurance. If your child dies young, the death benefit will pay you, the parents. This is not what we would want, of course. If your child dies when they are old, the death benefit will pay their children; your grandchildren. What a great gift to give your grandchildren.
Second, child life insurance has a 'savings account' attached to it. This 'savings account' is known as the Cash Value. Cash Value Life Insurance has been called a TFSA on Steroids because these policies have historically earned significantly more than a savings account year over year, and the money earned is guaranteed and can be withdrawn tax-free.
This means your child could use the money in their Cash Value to pay for university, a down payment on a house, to start a business, and even as retirement income, all from one account. It's for this reason that in my house we contribute to these policies for our children instead of the RESP.