Becoming a parent is one of the most amazing – and terrifying – experiences of your life. One minute, you're a completely independent adult who is carefully planning their future (and sleeping past 6 a.m.). The next minute, you're bringing your new baby home and wondering, “How am I going to keep this tiny, adorable human that's completely based on me alive?”
It’s scary without a doubt, but you also have so much to appear forward to. Having a child adds meaning to your lifetime with techniques you'd never expect. When your baby cries, you discover the proper way to hold them and calm their fears. And when your baby accomplishes a new feat – even something as simple as rolling over – you're able to celebrate right along with them.
Of course, becoming a parent isn't all sunshine and rainbows. In addition to the fun times, there are plenty of real responsibilities to take care of, too. In the end, your child won't stay small forever. Eventually, he or she will go to grade school, play sports, and make friends. And before you know it, they'll fly the coop to attend college and build a life of their very own.
Until that day comes, the choice is yours to help make the right choices so that you can provide for your loved ones. Even if that means planning how to protect them financially in case you weren't any longer around. This is what you should know about life insurance coverage for new parents.
Buying life insurance coverage as a new parent
While buying life insurance coverage might feel overwhelming, it's really not. Or, a minimum of, it doesn't need to be overwhelming. The process has seen some pretty significant improvements and streamlining in recent years. For instance, with Haven Life, you can submit an application entirely online in minutes and receive an instant decision on term life insurance coverage. Some qualified, healthy applicants up to the age of 45 might be able to skip the medical exam entirely through our InstantTerm process.
This should come as very welcome news to parents, who by nature are busy (putting it mildly). Taking out the waiting and confusion from life insurance means you have even fewer reasons to delay investing in a very necessary product.
But prior to taking the plunge on the policy of your, there are certain things you should think about when buying a proper life insurance coverage amount.
Kids are costly to raise
The costs of raising one child to 18 years old for a middle-income household is $233,610, based on estimates by the U.S. Department of Agriculture. This amount considers basics like housing, food, education, and daycare, along with the proven fact that child-rearing expenses tend to rise with age. Bear in mind, that quantity can differ drastically based on where you reside and how frugal or otherwise your way of life is.
Ask yourself this simple question: could your spouse or partner handle all of the child-related expenses should you be suddenly gone tomorrow? For most people, the answer is no.
This is how insurance coverage becomes so important. It can help ensure your partner can financially look after the children should you be no more around. In exchange for your payments for a term life policy, the life span insurance provider pays out a death benefit (within the amount of the life insurance policy you bought) that your beneficiary or beneficiaries may use to assist cover their expenses.
But peace of mind is perhaps the most crucial intangible benefit associated with investing in a life insurance policy. It gives you the reassurance that you are leaving behind financial protection for family. The beneficiary (or beneficiaries) can use the policy's death help to assist in paying for funeral costs, meet day-to-day living expenses or arrange for the near future.
Of course, calculating all of the expenses related to raising children to find out just how much term life insurance coverage you'll need can be tricky. Use a life insurance coverage calculator that will help you sort through all the costs associated with your family's future to provide you with an estimate of sufficient coverage.
Don't ignore college
We mentioned previously how expensive nurturing to the age of 18 could be. But, the daily costs of food and shelter don't always end whenever your child leaves high school.
If you intend to pay for your son or daughter's advanced schooling, then you should element in the price of college whenever you buy life insurance coverage. (The aforementioned life insurance calculator performs this, too, incidentally.)
For the 2021-2021 school year, average tuition, fees, room and board in a public, in-state university was $21,370, based on the College Board. At a private, non-profit school, average tuition, fees, room and board worked out to $48,510 per year. Over the past decade, college costs have risen faster compared to rate of inflation.
With enough insurance coverage, you could help your kids pay tuition and steer clear of the stifling amounts of student debt a lot of today's teenagers face.
Stay-at-home parents are very valuable
Many assume a life insurance policy for any stay-at-home-parent isn't needed because they do not earn a “salary.” This isn't the case.
Stay-at-home parents might not generate a paycheck, but consider all they are doing for the household. Most stay-at-home parents shuttle kids around, cook and clean, help youngsters with homework, do laundry and dishes, and make most meals for your loved ones – and that is just the bare minimum.
If you set up a stay-at-home parent's responsibilities, they'd make about $162,581 for the 92 hours of labor they are doing every week, according to a yearly survey from Salary.com.
It's imperative that you consider how/if the surviving spouse can afford to maintain all of that work. Often, that means paying for daycare and household help. While parents are irreplaceable, the proceeds of a life insurance coverage can be used to help bridge the financial gap and pay for this kind of support.
Employer-provided life insurance usually isn't enough
Employer-provided life insurance coverage, known as group life insurance coverage, is a great work perk. However, it can leave parents underinsured and potentially without coverage when they switch jobs.
Most employer-provided policies only offer coverage that's 1 or 2 times your annual salary. You can usually purchase more coverage if you would like, but it's in a “group rate.” Which means you often don't benefit from the rates you'd get like a young, healthy new parent like you would with an individual life insurance coverage.
Additionally, life insurance is going in which you go. Many employer-provided coverage is not portable, and when you have that option, it'll cost you more.
Your best bet is to get a person life insurance coverage while you are young and healthy. Many people start by considering life insurance coverage of Five to ten times their annual income.Revisit your life insurance as the lifestyle changes.
As a brand new parent, there might still be many unknowns inside your future and overall earning potential and expenses. Perhaps you're just getting started in a new career – or you intend to return to school to earn an advanced degree. Maybe you're renting a home but intend to buy soon.
How can you tell how much life insurance coverage you need whenever your income and circumstances will likely change?
Here's something to keep in mind: buying life insurance isn't something you're locked into doing only once. Make sure to revisit your lifetime insurance needs as the changes in lifestyle and your loved ones grows.
Keep in your mind that, with regards to life insurance coverage, something is certainly an improvement on nothing. However, a policy with a sufficient term length and coverage amount can help ensure adequate financial protection.
Life insurance charges under you think
With the high cost for children climbing each year, you may think that you cannot afford life insurance coverage. Reconsider. Overall, term life insurance coverage is a lot more affordable than most people realize. And when you purchase while you are healthy and young, you are able to lock in a minimal rate. For example, a 30-year-old woman in excellent health could get a 30-year, $500,000 Haven Term policy, from MassMutual, starting at $30.23 monthly.
As part of your financial plan b, term life insurance is among the most budget-friendly options. For the cost of a single meal out every month, you can potentially protect your family with hundreds of thousands of dollars in coverage.
Determine just how much coverage you need
Life insurance is a very personal product, and thus, families requires a various and specific amount. Factors such as your wellbeing, salary, debts, and bills impact how much insurance is best for you. A web-based life insurance coverage calculator will help you confidently (and quickly) figure out how much coverage you need. No guesswork or air math required.
As a parent, you know by pointing out unexpected. You cope with it every single day (and sometimes in the center of the night time).
Term life insurance coverage offers peace of mind in understanding that all your family members are financially protected. Now there is something big you can check off that seemingly infinite to-do list.