A Busy Parent’s Guide to Life Insurance

You might have just discovered that you’re pregnant. Or you might have just had your first— or fourth!—child. Or maybe you’re well into the very fun (and okay, a little sticky) toddler years. No matter where you are in your parenting journey, your child’s future is probably top of mind 24/7.  

Though there are a lot of ways to build a brighter tomorrow for your child, one really important financial decision that you should consider now is applying for term life insurance. 

We know, life insurance can be uncomfortable to think about. And, figuring out life insurance may seem secondary to, say, furnishing a nursery or signing up for preschool, but it’s a piece of planning that may have a big impact on your child for years to come. 

So, when it comes to life insurance…where do you start? Here’s our term life insurance buyer’s guide with the information parents (and parents-to-be!) need to know…

Life Insurance Guide 

What is term life insurance? 

There are different kinds of life insurance policies out there to consider. Term life insurance is a life insurance policy that creates a financial safety net for a certain amount of time…typically, 10, 15, 20, or 30 years.  

This is perfect for parents because it allows them to choose a timeframe that best suits their financial responsibilities while their kids are young. For example, some parents choose a term that matches the timeframe of a mortgage, which helps ensure that in the event of an untimely death that the mortgage, as well as other expenses, can be sufficiently covered. Term life insurance can remove the fear of financial risk in the future and provide a sense of assurance. 

How does term life insurance work?

First, parents choose a term and a policy amount. For example, $500,000 over the course of 20 years. Each month, you make a payment toward your term life insurance just like you would your monthly cable or water bill.  

If you pass away during the life of the policy, then your family would receive a payment. They can use the money for any purpose, including specific expenses that are related to your death. Plus, the money that the policy beneficiaries receive is typically income-tax free. 

When the term of the policy comes to an end, you don’t get your premium payments back, but you can continue the policy (at a higher premium) or apply for a different type of insurance policy.  

How could a term life insurance payout help my family? 

Families who receive a term life insurance payout might use those funds to help with everyday financial responsibilities that we don’t give much thought to on a day-to-day basis. Such as:

• To replace lost income that would have covered daily living expense such as mortgage or rent, groceries, utility bills, and personal expenses
• To cover debts incurred by the deceased, including unpaid bills and taxes
• To provide financial support for a stay-at-home-parent
• To cover funeral expenses, including estate tax
• To create a college fund or inheritance for children 

Who should get term life insurance?

Parents are really great candidates for term life insurance, for some of the reasons listed above (and you can read more about the benefits of term life insurance for parents here). But even if you don’t have children yet, term life insurance can create a financial safety net for others who may be financially dependent on you, such as a spouse or aging parents. If you are thinking about having children in the future, starting a term life insurance policy while you are in your 20s or 30s and in excellent health will mean having a low monthly premium, giving you great bang for your buck over time.  

How much does term life insurance cost?

Term life insurance tends to be more affordable than other types of insurance, but it varies from person to person. You can get a quote to figure out what your monthly policy would cost. 

The amount you pay for term life insurance each month depends on a few different factors, such as…

• Age
• Health
• Gender
• Coverage amount 

When should I buy life insurance?

If you’re preparing to buy life insurance, the sooner you purchase life insurance the less you’ll spend on premiums over time. Remember, term life insurance isn’t just for parents. Even if kids aren’t yet a twinkle in your eye, term life insurance can be a financial safety net that can give you peace of mind about student loan debt, a mortgage, or any other types of debts that would need to be covered after death. 

No matter where you are in your parenting journey, term life insurance is a simple, affordable way to help financially protect your loved ones. 

Disclaimer: The information on our site is NOT medical advice for any specific person or condition. It is only meant as general information. If you have any medical questions and concerns about your child or yourself, please contact your health provider.