Life Insurance

How moms can make the most of life insurance

Erica Kolari | Jan 2, 2020
Two moms at a park with their kids
Millions of women will welcome their first child to the world this year, possibly even you! If you are pregnant, your days are likely filled with a mixture of excitement and nervous anticipation. You may be baby-proofing furniture and painting the nursery a cheerful color. But there’s one purchase you may not have thought about as a must-have for your baby, and that is life insurance.

An affordable life insurance policy can help protect your new addition

There are several reasons to buy a life insurance policy before you give birth. First, think of the value you provide to the household. What would happen if you were no longer there to provide support for your child?

If your partner is a stay-at-home parent, for example—would they be able to carry on without your paycheck? In the event of your unexpected death, your partner might be responsible for paying off your debts, loans, and other financial obligations. They could have to take a second job to cover the loss, or even quit their job to oversee your young child's upbringing.

If you're a stay-at-home mom, your death could be equally devastating from a financial perspective. Would your partner be able to afford to replace your contributions as a parent and homemaker? They might have to pay for a nanny, household cleaning, and the multitude of other tasks you currently provide. To put that amount in perspective, the loss of a stay-at-home parent costs an average of $162,581 per year.

What type of life insurance is right for me?

There are two main types of life insurance: whole and term. You might consider whole life if you are nearing retirement age and want the security of a guaranteed death benefit for your child, or if you’re planning your estate and want to pass assets down to the next generation.

Term life insurance can be a practical and affordable coverage option for most families. Term policies provide protection for a predetermined time frame at a fixed monthly cost (the time frame can range from five years to 10, 20, 30 years, or more). A general rule of thumb is to budget for a policy that covers your child until they are no longer being supported by you.

How much life insurance will I need?

To calculate the amount of coverage you need, add up all of your current assets and subtract your debts and likely future expenses. If your results are a positive number, you may not need life insurance, but if your results are a negative number, you may want to consider a policy to protect your growing family. Not sure if you calculated correctly? Try our coverage calculator.

As your child grows, so will the expenses they bring. It can cost up to $233,000 to raise a child to the age of 17, not including the cost of their college education and living expenses. It’s also becoming more common for adult children to live with their parents into their early twenties as they establish themselves. Their financial needs (student loans, rent, and living expenses) should be taken into consideration when you’re thinking about how much coverage you need.

Let’s be real, being a new mom can be overwhelming. From the new routine (sleep, feed, repeat), to balancing all the other important chores and demands of pre-baby life. Something that shouldn’t be difficult or stressful is ensuring that your family is set up for a healthy financial future. Owning a life insurance policy can protect your family during the years they need you most.