life insurance for new parentslife insurance for new parents

A Guide to Life Insurance for New Parents

Family Finance
December 25, 2023
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Hey there, moms and dads!

Among a thousand and one other responsibilities, there is something you may not have thought of: life insurance.

We know "life insurance" can sound a little scary, even dull.

And you probably have a ton of questions floating around in your head.

Do I need life insurance? Why?

When's the best time to get it?

How much will it cost?

This guide is going to make life insurance for new parents crystal clear.

Let's get this show on the road!

Up Ahead:

What is Life Insurance and How Does it Work?

Let's start simple.

Life insurance is a contract you make with an insurance company.

You agree to pay a set amount of money (the premium) regularly, often monthly.

In return, the insurer agrees to pay a lump sum to beneficiaries you choose after your death.

This money is known as a death benefit.

Why New Parents Should Get Life Insurance

As new parents, life insurance isn't just another box to check on your grown-up to-do list.

It's an important safety net for your family.

When you become a parent, your world changes, your priorities shift.

Suddenly, you're not just living for yourself.

So, what happens if you're no longer there?

There's this little human who depends on you for everything.

So, what happens if you're no longer there?

If one parent is no longer in the picture, the family can lose an income stream or a primary caregiver. This can lead to increased financial stress or the need for the surviving parent to juggle between work and child care.

This is where life insurance proves its value.

With a solid life insurance policy, your family gets financial security, come what may.

With a solid life insurance policy, your family gets financial security, come what may.

It helps ensure that your family meets their financial obligations. It's like an invisible shield, protecting your family from the unexpected financial blows life can sometimes deal.

From paying off debts, covering everyday living expenses, to even securing your kiddo's future education costs - life insurance has your back.

When to Get Life Insurance

So, now you're thinking, "Alright, I get it, life insurance is important. But when's the best time to get it?"

Now you're asking the right questions!

When Deciding to Expand Your Family

The moment you start thinking about having kids is a great time to start preparing for a baby financially.

That includes considering life insurance, writing a will, and starting to invest.


Two reasons.

First, life insurance rates tend to be lower the younger and healthier you are.

Securing life insurance early means one less thing to worry about when baby arrives

Second, securing life insurance early means one less thing to worry about when baby arrives.

So, getting a head start on life insurance could save you not just peace of mind, but also a fair bit of cash.

Not bad, right?

Life Insurance During Pregnancy

Is it still a good time to get life insurance if you're already expecting?

The short answer is yes, but with a little asterisk.

The ideal time during pregnancy to get insured is during the first trimester. That's when insurance companies tend to see lower risk, making it easier and often cheaper to get coverage.

As the pregnancy progresses, some insurers might become a bit more hesitant.

It's a good time to get life insurance whenever you can

They may prefer to wait until after delivery to issue a policy. This is because later stages of pregnancy and childbirth can come with increased medical risks, which can also influence your premium rates.

Overall, it's a good time to get life insurance whenever you can.

Once your little one arrives and those sleepless nights kick in, you'll be grateful you already ticked life insurance off your list.

Getting Life Insurance with a New Baby

Your little bundle of joy is here - congratulations!

If you haven't gotten to getting life insurance yet, the time is now.

You now have a new family member to consider, which likely means increased expenses and responsibilities.

Life insurance can provide that peace of mind knowing your family will have financial support if anything were to happen to you.

Young Families with Kids Ages 5-10

As your kiddos grow, you might be wondering if you've missed the life insurance boat.

Not at all!

It's never too late to start thinking about securing your family's future.

Now, with your kids growing up, you might want to think about a shorter-term life insurance policy. One that stretches just long enough to see your youngest one through to adulthood.

How Much Life Insurance Do Young Parents Need?

Let's get down to the nitty-gritty. You're sold on getting life insurance, but the big question is, how much do you actually need?

Pinning Down the Amount and Length

To start consider a policy that covers 10-15 years' worth of your income.

That’s a good benchmark to ensure your family financial stability if something were to happen to you.

So if you're making an average salary in the U.S., which is about $60,000 a year, that means you might be looking at a policy that pays out between $600,000 and $900,000.

What about the length of the policy? 10, 20, or 30 years?

consider a policy that covers 10-15 years' worth of your income

A good rule of thumb is to choose a term that lasts until you expect your children to be financially independent.

If your child is a toddler now, you might want a term of 20 years or so.

If you're only thinking about starting a family, you may want to go with 30 years.

Now, here's the catch, you don't want to go overboard and buy too much insurance.

If you get a $2 million policy when a $600,000 policy would cover your family's needs, you're wasting money on premiums

You may end up paying hefty premiums for coverage your family doesn't really need.

If you get a $2 million policy when a $600,000 policy would cover your family's needs, you're wasting money on premiums.

Remember, life insurance is about financial security, not leaving your family a fortune.

For that, think of investing for your kids early and often.

Insure Both Parents

Should both parents get insurance?

The simple answer is yes, both parents, income-earning or not, should consider getting life insurance whether or not both parents bring an income.

A stay-at-home parent may not bring in an income, but they provide valuable services like childcare, home maintenance, and more.

If the stay-at-home parent were no longer around, the surviving parent would need to cover these costs, which could run pretty high.

The Best Type of Life Insurance for New Parents

The world of life insurance can seem like a maze with all its options.

Let's review the best types of life insurance for new parents.

Term vs Whole Life Insurance

You've got two main contenders in the ring: term life and whole life insurance.

Term life insurance, as the name suggests, covers you for a certain term (say, 10, 20, or 30 years).

If you pass away within that term, your beneficiaries receive the payout. Simple and straightforward.

On the other side of the ring, you've got whole life insurance.

This type of policy covers you for, well, your whole life.

Whole life insurance has added complexity that usually comes with higher costs

It combines that death benefit with a cash value component, which acts somewhat like an investment account.

Mixing a death benefit with investment activities increases the complexity of whole life policies.

This added complexity usually comes with higher costs.

So, which one's the champ for new parents?

Why Term Life Insurance is Often the Winner

If we had to pick a winner for most new parents, we'd put our money on term life insurance.


It’s affordable, simple, and does the job, making it a popular choice among new parents.

You get substantial coverage for a set period, during the years your family would most need the financial safety net.

Term life insurance is affordable, simple, and does the job, making it a popular choice among new parents

Remember, the goal is to replace lost income or cover expenses like childcare and education, not necessarily to build a cash value over time.

Building generational wealth happens through investments and savings, not through life insurance policies.

How Much Does Life Insurance Cost for New Parents?

You're probably wondering by now, "Sounds great, but what's it going to cost me?"

Let's take a look at common costs.

Factors Influencing Term Life Insurance Price

Several factors come into play when insurance companies set the price for your premiums.

Your age and health status, for example, are big ones.

Younger, healthier people generally get lower rates because they're less risky to insure.

The length and amount of coverage you want also impact the cost.

Premiums by Age Group

Let's break it down by age group, keeping in mind that these are generalizations and actual premiums may vary.

Parents in their 20s:

You're in a great position to secure affordable life insurance.

You're young, probably healthy, and your risk level is comparatively low.

Plus, the sooner you get life insurance, the longer your family is protected.

Parents in their 30s:

For a 20-year, $1 million policy, males typically pay $30 per month, and females pay around $24.

If you choose a 10-year term for the same coverage, males pay about $18, and females pay $15.

For a 20-year term with $250,000 in coverage, the average monthly cost for males is $13.48, and for females, it's $12.40.

Parents in their 40s:

The monthly premium for a 20-year, $1 million policy increases to $49 for males and $41 for females.

A 10-year term with the same coverage will cost males $26 and females $24 on average.

For $250,000 coverage on a 10-year term, males will pay about $16.31, and females will pay $15.22.

These numbers are averages, and your specific premium could vary based on individual circumstances and the insurance company you choose.

Affordability and Coverage

The key to remember here is that life insurance can be more affordable than you think.

Especially when you consider the peace of mind it offers, knowing that your family would be financially protected if the worst should happen.

Sure, it's another expense to plan for, but when you weigh that against the financial security it can provide your family, it becomes an easy decision.

Additional Questions

Do I Need Life Insurance for My Newborn Baby?

As a general rule, life insurance is intended to replace lost income or cover debts, which doesn't apply to newborns.

Instead, consider starting a UTMA account, or a 529 plan.

UTMA accounts allow you to invest for your child's future in a tax-advantaged way, while a 529 plan is a way to save for future education costs.

Both options can provide for your child's future needs more effectively than life insurance.

Do Single Parents Need Life Insurance?

Single parents often bear the full financial responsibility for their children, making life insurance even more important.

In the event of the unthinkable, a life insurance payout could provide the necessary support to help your children handle future expenses.

What Is the Most Affordable Life Insurance for Young Families?

Term life insurance is generally the most affordable and straightforward option for young families.

It offers good coverage at lower prices, making it ideal for those on a tight budget.

You can choose a term length that aligns with your family's needs - typically until your youngest child is financially independent.


Navigating the world of life insurance can feel overwhelming, especially when you're juggling the joys and challenges of parenthood.

But understanding the importance of life insurance is a crucial step in protecting your family's financial future.

So, take a moment to pat yourself on the back - you're doing great!

That wraps up our guide to life insurance for new parents.

We hope we've managed to demystify some of the complexities around life insurance, and help you take confident steps toward safeguarding your family's financial security.

About Greatest Gift

Greatest Gift is the financial gifting platform for children's long term savings.

Send and receive monetary gifts for children's long term savings.

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