Northwestern Mutual

Welcoming a New Child or Grandchild

Protect the financial well-being of your growing family.

Welcoming a Child or Grandchild

Congratulations on your newest family member!  Now more than ever, your goal is to protect the financial well-being of your family. As you welcome a new child or grandchild, evaluate your financial plan to ensure it's designed to meet changing priorities as your family grows, by taking steps to:

Update or develop your estate plan.1

Estate planning helps to ensure your wishes are known and honored when you're no longer able to articulate them. It also gives your family peace of mind; you don't want to burden them with having to make important decisions when they are already dealing with your illness or death. A comprehensive estate plan will include:

  • Naming a guardian for your child or children.
  • Establishing a will or trust for the transfer of assets according to your wishes.
  • Naming a power of attorney for health care.
  • Naming a power of attorney for your finances.
  • Making clear your end-of-life health care directives.

Protect your income.

Your ability to earn an income is your greatest asset. Protect it. If disability income insurance is offered through your employer, take advantage of the opportunity and the group rate that may be offered. However, most group plans cover only a portion of your income. So to fully protect yourself, you may want to consider a supplemental individual policy. An individual policy is also portable. Because you own it, the policy can move with you from job to job as long as you pay the premium. An individual policy can also be a great way to protect your ability to earn an income if you're self-employed.

If you should develop a chronic illness or disabling condition, long-term care services can help you get through your daily routines. Extended long-term care is not covered by Medicare, Medicaid or health insurance plans, which is why any plan to protect your income should include consideration of long-term care.

Northwestern Mutual Planning Pyramid

And, to protect the financial future of your loved ones, consider purchasing a life insurance policy to make sure they're taken care of after you're gone. Both term and permanent whole life insurance provide benefits to your loved ones to pay bills or take care of other financial obligations in the event of your death. As an added benefit, whole (or permanent) life insurance also builds cash value that can grow tax deferred and becomes a source of funding you can utilize2 easily; no credit checks, no applications, no waiting for approval. Of course, if you borrow against the cash value and don't pay it back (with interest), the amount of the loan would be deducted from the amount your beneficiary would receive in the event of death.

Establish an emergency fund.

No matter how carefully you may plan for the financial needs of your growing family, there can be unexpected expenses. Plan for them by establishing an emergency fund. Aim for a total of three to six months of living expenses.

Additional considerations for parents and grandparents.

You may also want to consider a juvenile life insurance policy for your child or grandchild, guaranteeing future insurability today when he or she is young and healthy. In addition to providing a death benefit, a whole (permanent) policy will also build cash value that can be used later to fund goals such as college education or create the foundation for your child or grandchild's own financial security.

Education Funding Whitepaper

Focus on saving for retirement before saving for your child's or grandchild's college. Why? Because children have options for funding their education, such as loans and scholarships. Retirees don't. It's much like the instructions you're given by flight attendants when you travel by air: In case of emergency, put your oxygen mask on first before putting it on your child. If you don't take care of funding your own retirement, you may end up weighing down your kids with that responsibility later in life.

Get expert help to address financial support of a child with special needs. For a family with a child with special needs, planning is a necessity. Work with a financial advisor who can guide you through the process of balancing the complex needs of a family—from retirement to education funding—with the needs of a loved one with special needs.

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