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Life Insurance for New Parents

When you become a parent, life takes on a new meaning. You’re no longer living just for yourself, but for the young family you’ve created. With life insurance, you’ll know your family will be on solid financial ground if you can’t be there. That might even help you sleep better at night — at least when the baby’s not up.
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Protect the people who depend on you
Life insurance provides those who depend on you financially with an important safety net.

Why new parents need life insurance

Life insurance pays money to a beneficiary — a spouse or co-parent, for example — when the insured person dies. You choose a life insurance beneficiary when you buy coverage.
The money can support the family in your absence, such as paying the mortgage and funding your child’s education.

Why both parents need life insurance

When deciding on the best life insurance policy for your young family, keep in mind: It's not just the breadwinner who needs life insurance. Stay-at-home parents should have coverage too, even if they don't earn income.
A stay-at-home parent provides valuable services, such as child care, that the surviving parent would have to pay to replace. A life insurance payout could also enable the surviving breadwinner to take a few years off work while the family regains footing.

Best life insurance for new parents

There are two main types of life insurance: term life and permanent life.
Term life insurance is temporary.
Term life is the most affordable kind of life insurance — you can buy a lot of coverage for a low price. You buy a term life insurance policy to cover a time period, such as 10, 20 or 30 years.
Permanent life insurance lasts your entire life.
It pays out whether you die next year or in 50 years. Whole life, universal life, variable universal life and indexed universal life are types of permanent life insurance.

How much life insurance to buy

To figure out how much life insurance to buy, think about your family’s financial needs if you weren’t there to support them. Here are four steps:
  • Decide how many years of income you would like a life insurance policy to replace, and multiply your income by that number.
  • Add other financial obligations, such as debts and college costs for your children.
  • Include the cost of services you provide that would have to be replaced.
  • Subtract savings and any other life insurance coverage you already have.

Naming beneficiaries

When you buy a policy, you name a beneficiary, such as your spouse, to receive the life insurance money. Don’t name your young children, though, even if you want the money to benefit them. If the beneficiary is a minor when you die, the life insurance company can’t pay the benefit until the court appoints a guardian.

How life insurance is priced

The annual price depends on the type of policy, the amount of coverage and, if it’s a term life policy, the length of the term. Other factors include:
  • Age: The younger you are, the less you pay.
  • Sex: Women generally pay less than men.
  • Health: The healthier you are, the less you pay.
  • Smoking habits: Smokers pay more than nonsmokers.
  • Hobbies: People with risky hobbies, such as scuba diving, pay more for coverage.
Before you buy, shop around and get life insurance quotes from different providers. Life insurance prices vary among companies. You can get life insurance quotes online for term policies, but you’ll want to work with a financial advisor if you’re choosing a permanent life insurance policy.

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