Life Insurance Guide for New Parents

Life as a new parent is exhilarating, exhausting and deeply rewarding. Between your responsibilities of caring for, feeding and protecting your child, you may already be thinking about how you can safeguard them in the future should anything happen to you.

Life insurance is one way of helping support your loved ones financially in the event of your death. Finding the best coverage can be daunting, especially for first-time buyers. Learn more about life insurance, its importance, the best time to invest in insurance and how to get started.

When expecting a baby, your perspectives and priorities are likely to change. There are several preparation factors you have to consider as you’re not only responsible for yourself but also for the little human who relies on you.

Parenthood also comes with new expenses. According to the United States Department of Agriculture, the average cost of raising a child through age 17 is $233,610. This amount includes shelter, food and daily childcare needs.

However, these are not the only expenses parents have to prepare for. For example, higher education is not covered in the average cost of raising a child. That is where life insurance for new parents comes in.

Life insurance can help protect your child's financial future, especially if you can no longer provide for them. It can support your child’s financial needs, whether for a future home mortgage or to fund their college education.

The cost of higher education is expensive and continues to increase every year. A life insurance policy can help your child afford college or any other form of higher education. If you buy the right insurance, your child will not need to look for various financial resources or student loans to afford their diploma.

Having a substantial and consistent income is essential as a parent. Aside from everyday needs, it’s important to plan for future expenses and unexpected incidents. However, if you’re the primary income earner and you’re involved in a fatality, your death can leave your child and others with a financial burden. Depending on the life insurance policy you choose, your family can get a payout that can help replace your income.

The National Funeral Directors Association (NFDA) reports that the average cost of a funeral is $7,848. In the event of your passing, your loved ones will be having a hard time dealing with their loss. Life insurance can reduce the burden. This will allow them to not have to think of the expense as the death benefit from a policy will cover funeral and burial costs.

Having debt is common. However, as new parents, you would not want your child to inherit your debts in the event of your death. A life insurance payout can cover the expenses you may leave behind, such as your mortgage, car payments, credit card debt and other loans. It can also cover accumulated medical costs if you have been dealing with an illness or been hospitalized.

When it comes to insurance, there is no one-size-fits-all plan. The best life insurance for new parents depends on your circumstances and needs. With the various options available, you may find it difficult to choose the right policy. Understanding life insurance types and knowing how much coverage you need can help you make the right decision.

In essence, whether you opt for newborn life insurance or a broader policy that covers the entire family, the key is to choose coverage that aligns with your family's financial goals.

Choosing the right life insurance can be overwhelming for new parents. There are numerous products on the market with various add-ons and options. Identifying your priorities and weighing your options’ pros and cons can help you decide the best policy for you and your family. It would help if you also considered your financial situation to ensure that you can afford the life insurance plan that you choose.

There are two main types of life insurance. These are the term life insurance and permanent life insurance.

• Term life insurance refers to a policy that provides coverage for a certain period, usually 10, 20 or 30 years. It is typically the cheapest option.
• Meanwhile, permanent life insurance does not expire as long as you pay your premiums. The most common types of permanent life insurance include whole life and universal life.

The best time to get life insurance is now. Life insurance prices tend to increase as you age and it’s a great investment that will protect your family against financial burden should the unexpected happen. Your life insurance policy is also a good financial planning tool that could be used for emergencies and toward strategic goals for your family’s future.

There are various ways to use life insurance. Aside from covering funeral and burial expenses, it can be used to fund your child’s education or pay for financial obligations you may leave behind. You can also use life insurance for estate planning.

When selecting a policy, you will need to choose the best life insurance for new parents based on your family's specific needs, name your beneficiaries, determine how long you need coverage and if you and your partner both need to get a policy.

Understanding life insurance terms and concepts is essential when choosing your policy. There are various factors to consider, but knowing where to begin as a new parent can be challenging. Learn more about the basics including coverage, beneficiaries and premiums.

Choosing your life insurance beneficiaries is one of the most important decisions to make when purchasing life insurance. The beneficiary is the person who will receive the benefits from your policy upon your death.

Some parents choose to name their children; however, that is not always a wise decision, especially if you’re a new parent. Prior to selecting your beneficiaries, consider their age, status and relation to you.

New parents should also consider setting up a life insurance trust. This is a great option if you are concerned about your child’s age or needs. With this option, you can set the terms of your life insurance death benefit, such as how it may be used and how and when the distributions will be made.

For instance, an irrevocable life insurance trust (ILIT) allows you to minimize estate tax liabilities on the assets you would leave behind through the removal of your life insurance from your estate.

Learning about life insurance can be overwhelming, especially for new parents who have not determined a policy before. MoneyGeek answers some frequently asked questions (FAQs) that can help you decide what type of policy to get and whether life insurance is right for you.

Juggling your responsibilities as a new parent can be challenging, despite having to factor in your financial matters. Fortunately, there are resources and programs available to help learn more about key financial topics for your family.

• Baby Center: Calculate possible expenses new parents have to prepare for during their child’s first year using BabyCenter.com’s calculator. The baby costs calculator can also help you create a budget plan.
• Office of Community Services: The Office of Community Services offers the Low-Income Home Energy Assistance Program (LIHEAP) to help families in need of assistance with energy costs. With this, the agency hopes to help keep families safe and healthy.
• Office of Family Assistance: The Office of Family Assistance, under the Office of the Administration for Children & Families, launched the Temporary Assistance for Needy Families (TANF) program to give low-income families with children monthly cash assistance through their state or territory.
• Single Parents Alliance of America: Raising a child as a single parent comes with additional challenges. The SPAOA offers support and resources to help single parents.
• U.S. Department of Agriculture Food and Nutrition Service: The Food and Nutrition Service has a program named Special Supplemental Nutrition Program for Women, Infants and Children WIC) that aims to help low-income women who are pregnant, breastfeeding or postpartum. The program also provides nutritious foods to infants and children up to age 5.