What New Parents Should Know About Life Insurance

Mar 17, 2023 2 min read

When new parents have a baby, they get the basics down first — safety proofing the house, finding the right pediatrician, learning everything they can about proper nutrition and sleeping habits — and then start looking toward the future. Life insurance for new parents can provide peace of mind and financial security for your family.

1. What Is the Best Type of Life Insurance for Young Families?

Out of the many types of life insurance available to young parents, term life insurance is the most practical because it provides an affordable way to get coverage for a low price. Term life can be structured for 10, 20 or 30 years, the number of years it will take for kids to grow up and provide for themselves. If the worst happens, term life benefits can provide the safety net needed to keep kids on a path to financial independence without the burden of mortgage and education debt.

2. Should Both Parents Be Covered?

Yes. Today, most families are dual-income families. Having both parents insured covers the loss of a significant portion of a family’s income. Even if a family has one primary income earner, the other parent is likely responsible for childcare and household management, expenses that would not be covered if that parent were to pass. Secure life insurance for both parents as soon as possible since rates rise with each year of age.

3. Can I Get Life Insurance While I Am Pregnant?

Yes, but expect higher rates. Life insurance premiums are lower for young people in good health. Life insurance premiums may increase for young mothers during pregnancy because of the inherent risks involved. It’s best to get life insurance before a pregnancy to lock in the most affordable premium. If applying for insurance during pregnancy, the underwriting process can be more intense and may even be delayed until after birth. Applying for life insurance after having a baby will also be more complicated. Common factors used to determine premiums such as weight, blood pressure and cholesterol level are impacted by pregnancy.

4. How Much Life Insurance Do I Need?

The Brookings Institute estimates the average cost to raise a child in a middle-income U.S. household is more than $300,000. That does not include supporting a child through higher education, potentially another four to eight years of out-of-pocket financial commitment. To determine how much life insurance is needed, consider the daily expenses of maintaining the household if the primary income earner’s wages are taken out of the equation. Add in the cost of future expenses such as education and the length of time a death benefit is needed to cover those costs.

5. How Does Life Insurance Work with a Newborn?

New parents take out life insurance policies to protect their kids. It’s best to name a partner or designate a trust as the beneficiary, not the kids. Minors cannot receive death benefits, so it makes more sense for a trusted adult to carry out financial wishes. With an adult making financial decisions, children can use a life insurance death benefit to become debt-free in the short-term and pay for college and living expenses in the long-term.

Plan for the Future

Life insurance brings the peace of mind that comes with knowing you are protecting your family’s financial well-being should tragedy strike. Contact a Farm Bureau agent to learn more about the best type of life insurance for young families just starting out.

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.