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 including 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 term 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? With your unexpected death, your partner might be responsible for paying off your debts, loans, and other financial obligations. They might 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 your contributions as a parent and homemaker? If you die, they might have to pay for a nanny, household cleaning, and 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.

Now that we’ve agreed that life insurance can be essential for all moms, it’s time to describe what your options are when it comes to life insurance.

There are two main types of life insurance: whole and term. As noted in our Definitive Guide to Life Insurance, “Whole life is permanent insurance that remains in effect for the entire life of the insured party as long as the monthly premium is paid. Whole life insurance also includes a savings element commonly referred to as cash value. For this reason, premiums for whole life insurance are usually more costly than term life.”

Term life insurance can be the most 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). As a rule of thumb, budget for a policy that covers your child until they are no longer being supported by you.

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.

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