The purpose of life insurance is to cover any financial loss that will occur if you die. If you’re a parent, your children and possibly your spouse depend on you for their financial health. Life insurance coverage can ensure that your family is taken care of if you pass away.
Whether you’re the parent of teenagers or you’re still in the family planning stage, the sooner you get life insurance coverage, the more affordable it’ll be. If you’re not sure where to start with getting financial protection for your family, a Policygenius expert can help.
When should new parents buy life insurance?
The younger you are when you purchase a policy, the cheaper your rates will be. Because of this, it’s generally a good idea to buy life insurance as soon as you know you plan to have a family.
If you’ve recently grown your family
If you’ve recently grown your family, it’s probably a good time to buy a life insurance policy, because your financial protection needs have likely changed.
The life insurance application process can take up to five to six weeks from start to finish, so it’s better to apply sooner rather than later. You can also ask your life insurance agent if there are any no-medical-exam life insurance options that are available to you, which will speed up the process.
If you're planning to have a child soon
You can still get life insurance while you’re pregnant. If you’re currently pregnant, try to apply in your first trimester. This is because potential pregnancy complications (such as gestational diabetes, or pre-eclampsia) can affect the cost of your life insurance due to increased health risk.
It’s common for life insurance companies to postpone your application until after delivery if you’re experiencing complications.
If you’re planning to become pregnant soon, it’s a good idea to go ahead and apply now. This way, you can have active coverage before your child is born and you won’t have to worry about any potential rate changes due to pregnancy.
If you’re adopting a child or having a child through a surrogate, it’s still important to buy life insurance. Life insurance is meant to serve as a financial safety net for your family — so you’ll still need a policy even if you’re not the one physically having a child.
If you plan on having a child in the next 5 to 10 years
If you know you want children in the future, you can likely save money by applying for life insurance now. Life insurance rates increase an average of 4.5% to 9% every year you age, so by applying early, you can secure cheaper premiums for the next 20 to 30 years.
What kind of life insurance do new parents need?
For most new parents, term life insurance makes the most sense. It’s the most affordable type of insurance and lasts only as long as you need it to.
Below are a few common types of life insurance and how they might benefit new parents.
Term life insurance
Term life insurance is affordable and easy to understand. It offers coverage for a specified term and then it expires. You can get term life insurance to last until your children grow up or until you retire.
The goal of term insurance is to provide a financial safety net for your family to cover expenses and maintain their lifestyle if they had to live without your contributions to the household.
What term length do new parents need?
Many new parents choose a 20-year or 30-year term. This way, life insurance coverage will last until your children are no longer financially dependent.
Permanent life insurance
Whole life, universal life, and other types of permanent life insurance are more useful for people who are looking to use life insurance to diversify their investment portfolio or those with long-term financial obligations.
Whole life policies are typically five to 15 times more expensive than a comparable term life insurance policy because they last for life. They also come with a cash value and can act as a tax-deferred savings vehicle.
If you have a child with a disability who will be financially dependent on you for life, a permanent life insurance policy might make sense. Speaking with a licensed agent can help if you’re not sure whether a permanent life insurance policy is right for you.
Group term life insurance
Group life insurance is most often offered through employers as part of a benefits package. Group life insurance premiums are often subsidized by the policyholder (most often, the employer). As a result, it can be a cheap option for a small amount of coverage.
Is group term life insurance coverage enough for new parents?
While it’s better to have some life insurance than none, group term life insurance isn’t enough coverage on its own. Typically, group policies only offer you around $50,000, or one to two times your annual income in coverage.
Group life insurance typically isn’t portable either, which means that you can’t take it with you if you were to leave your job or change employers.
→ Learn more about different types of life insurance
How much life insurance do new parents need?
New parents should think about how much their surviving spouse would need for their expenses, including mortgage or rent payments, childcare, and — down the road — how much they would need for college savings or their own retirement.
The USDA estimates the average cost of raising a child from birth to age 17 to be around $310,605 for a middle class family — children are a significant factor when it comes to household expenses. [1]
Most financial advisors say that 10 to 15 times your annual salary is a good place to start. Another popular method is to multiply your income by the number of years you’d want to support your family, and then add $100,000 for each child.
Policygenius’s life insurance coverage calculator can help you find the best number for your particular situation.
→ Learn more about how to calculate how much life insurance you need
Should parents buy life insurance for their child?
Life insurance for children is rarely recommended as a financial priority because it’s often meant to replace income, and children don’t earn any.
However, child riders are a relatively affordable add-on you can purchase with most term life insurance policies. Child riders typically begin insuring children as young as 15 days old. You can get $10,000 of coverage for your child for about $5 per month. This is what most people would need to for burial expenses for their child.
You can also purchase whole life insurance policies for your child. Some people use this as a tax-deferred savings method, since whole life policies come with a cash value account. However, we recommend consulting with a financial advisor first, because other resources like 529 plans or custodial accounts can accomplish the same goal.
Should I name my child as my beneficiary?
It’s not recommended that you name a minor as the beneficiary of your life insurance policy. Your child won’t be able to receive the money until they come of age, and the money could be subject to additional fees, taxes, and court costs. Instead, you should name an adult that would care for your child if you die, or set up a trust for them.
Many people choose to list their spouse or partner if they have one, since they’d be responsible for the finances as well as custody of any children. If you’re a single parent, you’d likely want to speak with a financial advisor about a trust, if you can, to make sure the funds you’d leave behind would be used exactly as you intend.
We recommend speaking with a lawyer, either to set up a trust or denote a custodian for assets under the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) laws, [2] which allow you to give an asset to a minor for use when they come of age. The custodian can use those assets for qualified expenses for the benefit of the child until then.
Life insurance considerations for different family structures
Single parents, parents with partners, and stay-at-home parents all need financial protection for their children.
Life insurance for stay-at-home parents
Stay-at-home parents need life insurance because they offer significant contributions to the household including childcare and other domestic labor. In their absence, the other parent would need to pay for childcare and those other services.
Typically, we recommend looking at a $100,000 or $250,000 policy to start, depending on how old your children are and your other financial obligations. The average cost of childcare alone as of 2022 was between $5,357 and $17,171 annually — and it's been outpacing inflation. [3]
Even just five years of childcare would cost over $50,000 on average, without factoring the cost of cleaning, cooking, and other domestic tasks.
A $250,000, 20-year life insurance policy for a 30-year old stay-at-home mom can cost as little as $15.17 per month. A comparable policy for a 30-year-old stay-at-home dad would cost about $18.19 per month.
Stay-at-home parents can also typically match their spouse’s coverage based on their income. In other words, if your spouse makes $50,000 and applies for $500,000 of coverage, you could do the same, even if you’re a stay-at-home parent.
Life insurance for single parents
If you’re a single parent, you’re likely the primary income earner for you and your child, so having life insurance is even more important.
You can also look into making a trust to designate as your beneficiary. This way, you can outline exactly what the funds will be used for and ensure your child is taken care of if something were to happen to you.
Even if you’re no longer in a relationship, you can list your child’s other parent as the beneficiary on your life insurance policy. This isn’t required, but many single parents choose this option to ensure that their minor child is cared for financially if they die.
Life insurance for a two-parent household
It’s smart to buy life insurance for your spouse or partner, even if only one of you is earning an income. Since you likely share finances, you’d need extra funds to help adapt if you had to live without one person’s income or contributions to the household.
Life insurance for new parents in their 20s
New parents in their 20s will typically find life insurance affordable, as you’ll see below based on rates using Policygenius price data.
Age | Sex | $500,000 coverage amount, 20-year term |
20 | Female | $22.65 |
Male | $30.20 | |
25 | Female | $21.41 |
Male | $28.20 |
Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year, $500,000 term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Corebridge Financial, Brighthouse Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Transamerica, Symetra, and Foresters Financial. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 01/01/2024.
Applying as a young parent in your 20s can be convenient, too, since there are many no-medical-exam life insurance options available to young adults. In this case, you may not have to wait the full five to six weeks for your policy to be approved.
Life insurance for new parents in their 30s
It’s common for new parents to buy life insurance in their 30s — and rates are just slightly more expensive than what you’d see in your 20s.
Age | Sex | $500,000 coverage amount, 20-year term |
30 | Female | $22.98 |
Male | $39.32 | |
35 | Female | $26.28 |
Male | $31.92 |
Methodology: Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year, $500,000 term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Corebridge Financial, Brighthouse Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Transamerica, Symetra, and Foresters Financial. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 01/01/2024.
30-year-olds will generally have access to the same no-medical-exam products as 20-year-olds.
Life insurance for new parents in their 40s and beyond
New parents can buy life insurance in their 40s the same way as they can in their 30s — but your premiums will be slightly more expensive the older you are when you buy your policy.
Age | Sex | $500,000 coverage amount, 20-year term |
40 | Female | $35.27 |
Male | $42.94 | |
45 | Female | $49.91 |
Male | $63.84 |
Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year, $500,000 term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Corebridge Financial, Brighthouse Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Transamerica, Symetra, and Foresters Financial. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 01/01/2024.
From a health perspective, life insurance companies are more likely to postpone applications from people who are pregnant in their 40s than pregnant people in their 30s due to increased health risks.
The bottom line
No matter where you are in your parenting journey, getting life insurance is an important part of securing your family’s financial health. A term life insurance policy between 20 to 30 years is the best option for most new parents because it secures coverage while your children are dependent on your income.
If you’re a new parent and aren’t sure where to start, you can chat with a licensed Policygenius expert, who can help you compare life insurance options and choose one that’s tailored to your needs.
