New Parents' Guide to Life Insurance

The New Parents’ Guide to Life Insurance

When you hold your new baby in your arms, it’s hard to imagine he or she will someday be an adult.

But time flies. Before you know it, your baby will be graduating from kindergarten, applying to colleges and, ultimately, building an independent life away from home.  When your children are young, you’ll want to make sure they are safe and set up for success later in life.  One important way to do that is to make sure you have a basic life insurance policy in place.

Here are a few things to think about when considering life insurance coverage for your growing family:

The cost of raising a child

According to the U.S. Department of Agriculture, the cost of raising a child until he or she is 18 years old is almost $250,000. This may sound like a lot, but when you consider the costs of food, daycare, housing, clothing, education, recreational activities, it makes sense. So when you think about getting life insurance, consider whether or not your partner could handle these expenses if you were no longer here. If the answer is “no”, then life insurance is a smart way to ensure your family won’t be left in a financial bind, if the unthinkable should happen.  To plan for sufficient coverage, think about the monthly expenses your child (or children) would need covered until they are old enough to support themselves.

The cost of college tuition

The cost of sending your child to college can range from a few thousand a year for local colleges to more than $30,000-$40,000 a year for private colleges. These costs should be factored in when you’re considering a life insurance policy. Securing enough coverage ensures your children will get the education you dreamed of for them, no matter what.  It also gives them a leg up by helping them avoid significant student debt.

The importance of life insurance coverage for stay-at-home parents

Some people decide not to get coverage for the stay-at-home parent in their family. But according to Salary.com, it’s estimated that stay-at-home parents contribute almost $115,000 worth of unpaid labor to the family each year.  So if something were to happen to the stay-at-home parent, the cost of replacing the childcare, transportation, and cleaning services could have a dramatic impact on a family’s financial situation. Considering these costs is important.  A life insurance policy provides peace of mind and the reassurance that funds will be available to cover these necessities.  It will let your family maintain a sense of stability and keep your household running.

How much life insurance employers provide

Most people believe the policy that they have through work is enough to cover their family’s needs, but that often isn’t the case. Group plans generally provide only 1-2 times your annual salary, instead of the 5-10 times that is often needed for supporting a young family. Locking in your own additional coverage, above and beyond what your employer provides, is smart because it provides your growing family with the actual amount they’ll need should something happen to you. It’s also a policy that’s your and yours alone, even if you leave your job.

Smart life insurance lets you adjust your coverage over time

With companies like Ladder your life insurance policy can be flexible. You can apply for a policy today and begin coverage within the hour, if you qualify.  As your needs change, your coverage amount can too.  Thinking of having another child in the next few years? You can easily and independently apply for more coverage via our online dashboard in a matter of minutes. Have you paid off most of your mortgage and want to lower your insurance coverage? You can visit the Ladder dashboard online and lower your coverage amount – and monthly payment – with a few clicks, no agents or paperwork involved.

Life insurance can be very affordable for new parents  

If you’re a new parent, locking in a great rate while you’re young and healthy is a great way to save money long term.  You may be surprised by just how affordable a policy for you and your family can be.  Eight out of ten American overestimate the average cost of life insurance* — so many parents are relieved to see how affordable it can actually be once they get a quote.

Ready to consider your life insurance options? Follow these simple steps:

  1. Understand how much coverage you need. The best way to estimate your coverage is to use an insurance calculator and answer a few quick questions. It only takes a few seconds, and it’s extremely helpful to see how cost effective life insurance can be. Term life insurance is the best option if you want good coverage while your children are young (or while your aging parents might need extra help), but don’t want to be committed to paying 40 years from now, when you have less responsibilities and might not need as much coverage. (Here is a post on the different types of life insurance and why we’re a fan of term policies).
  2. Get a quote. Request a free, no-obligation quote in seconds. It will show you how much you could expect to pay each month for coverage. You can easily reduce the coverage to fit your budget and you can always apply for more later.  Some policies start at less than $10 a month so there is no reason not to check out your options.
  3. Get covered. If the quote works for you, the process to apply for coverage can take less than 10 minutes, and you’ll get an immediate decision. If you accept an offer, coverage will begin immediately and you can cancel your policy at any time, no questions asked.  Also worth noting is that Ladder’s life insurance is dynamic — so you can apply to ladder your coverage (and payments) up or shift it down as life evolves and your needs change.  

Life insurance is an important piece of your family’s security.  Spending a few minutes now to set up the right coverage for your needs will enable you and those you love to focus on what you love most, so you can get the most out of life and all it has to offer.

*Average Middle Marketing Debt and Retirement Planning (LIMRA, August 2014)