Planning ahead to give your family financial security is probably something you want to think about early in life - maybe even before your family starts growing.

Starting a family can mean you may face many large expenses - a new home, a new car, child care, extra medical costs, etc. And you may be able to afford these items with your household income(s) - with even a little leftover to create an emergency savings account. But what if you or your spouse were to die unexpectedly, and a part of the family's earnings wasn't there to support the family expenses any longer?

Life insurance is an option your family can consider to help protect in situations like this. The Life and Health Insurance Foundation for Education encourages young families to consider life insurance as a way to offer financial protection in the event of a loss. There are two types of life insurance, and depending on your family situation, either might work for you.

Term life insurance lasts for a "term" you choose, usually 10, 15, 20, or 30 years. During that time, your life insurance premiums are guaranteed not to increase. If you pass away during that time period, your beneficiaries get a cash death benefit. If you live longer than the term period, you may have the option to continue your life insurance coverage for an annual, renewable premium, which is generally much higher. You can usually convert a term life insurance policy to a permanent life insurance policy without getting a new medical exam. This type of insurance also tends to be less expensive.

Survivors can use this benefit for family expenses, debt payments like mortgage or auto, and even to pay for funeral costs.

Permanent life insurance is designed to last your lifetime with regular, annual premium payments. These premiums are typically higher than term life insurance premiums, but that is because you are also accumulating cash value in your policy in addition to death benefit protection. For a new family, this type of insurance may be a good fit because the younger you are, the lower the premiums will be, and you'll be banking a cash value that you can borrow against when you may need extra money for things like college tuition for your children, a new house or starting a business.

As you start your family, financial matters will be a central part of your planning discussions for the future - including 401(k), 529 plans for your children's college tuition payments, IRAs and even Social Security. Investing in life insurance may be the additional protection you need to make those finances more secure.Starting a new family? Finances are a big part of family planning
Category: Business