What Parents Need to Know About Life Insurance

You want to make sure your kids are taken care of, as a parent. You probably have a plan for how you’ll provide for their basic necessities, such clothing, food, shelter, and education. If something were to happen to you unexpectedly and take away your ability to provide for your loved ones, you would want to have a plan in place. After the death of the major breadwinner, 42% of households would have trouble meeting their monthly financial obligations (including rent/mortgage, electricity, groceries, and education costs). Having no life insurance is likely a contributing factor. Based on the results of the survey, only 52% of Americans had life insurance. Parents should invest in life insurance to ensure that their children will be provided for in the case of their untimely demise. Everything you need to know about life insurance, how it functions, and how it can safeguard your loved ones is laid out here.


Equally Deserving of Both Parents

It’s commonly believed that only parents who earn an income should purchase life insurance for their children. Even though they don’t get paid, stay-at-home parents put in a lot of time and effort caring for their kids, so they should seriously consider purchasing life insurance. If that parent were to pass away, the other working parent probably couldn’t keep up the care on their own.

They’d have to pay more to hire outside help for daycare and housework. This assistance might be partially or fully covered by a life insurance policy. 

What Level of Life Insurance Coverage Should I Obtain?

Payouts from life insurance policies are supposed to make up for the money you would have given your loved ones if you were still alive. It all depends on your specific situation, but here are some costs to consider while comparing plans and determining how much money you’ll need:

  • The money you’ve given (e.g. your salary)
  • For your child’s college education, how much do you hope to put away each year?
  • Cost of care for children (if you are a stay-at-home parent without current childcare arrangements, cost of care for your children to replace the time you were caring for your children at home should be a primary budgetary consideration).
  • Expenses associated with your mortgage/rent
  • Costs incurred by a family
  • Other Costs of Raising Children (such as extracurricular fees, camp fees, music classes)
  • Taxes due upon death and burial costs (optional)

Buying a life insurance policy is probably more inexpensive than you think.


Overestimating the cost of life insurance is a major reason why families forego purchasing coverage. For instance, in the aforementioned survey, nearly half of the Millennial respondents had a wildly inflated estimate of how much it would cost to insure a healthy 30-year-old on a term life insurance policy.

When you get a term life insurance policy, life insurance premiums are far more reasonable than many people believe.

Costing Out Life Insurance

The policy you choose, the insurer you choose with, the sum insured, and the length of the term all affect how much your annual premium will be for life insurance. However, additional elements that impact cost are:

  • Discounts are available for those who are younger than the standard pricing structure.
  • The sex factor: women receive a more favorable wage allocation.
  • The condition of your health: If you’re in good shape, you’ll save money.
  • Habitual use of tobacco: The prices for non-smokers are lower.
  • Those that indulge in dangerous occupations or pastimes have to shell out more for their insurance.
  • In most cases, the life insurance provided by one’s employer is insufficient.

Life insurance is a benefit offered by many companies. Group life insurance is the term for this type of coverage.

Additionally, since these policies typically only cover one or two times your annual pay, they may not be sufficient to meet your family’s financial obligations. A year or two after your passing, this could leave your loved ones in a precarious position.

Additional coverage can often be purchased at a discounted group cost, allowing you to safeguard your loved ones for a longer length of time. However, most policies supplied by employers cannot be taken with you if you leave your current company or if you change jobs.

Do I Need to Get My Child Life Insurance?

It all comes down to personal preference and budget, though. Even so, you should consider getting your kid some life insurance for a variety of reasons.

In the event of their premature death, these plans can help cover funeral and other related costs, and they can also serve as an investment in the child’s future.

Child health insurance typically ends at age 18 or 21, depending on the plan. They can then be converted to an adult coverage without having to reapply or undergo a medical evaluation. You can rest assured that your adult child will have life insurance if you do this, and your child can always buy more coverage later if they so choose.

Purchasing a life insurance policy for a child can be a wise financial move for their future security. The monthly premium you pay may be applied to what is called “cash value,” which functions similarly to a savings account. Then, when they turn 18 or 21, they can cash out the policy and utilize the money for whatever they like: more education, a down payment on a home, a company startup, etc.

In addition, they have the option of borrowing money against it.

Premiums for child life insurance policies can be as little as $5 or $10 per month, making them much more inexpensive than similar policies for adults.

It is acceptable, however, for families to invest in their children by opening other types of savings plans, such as Section 529 college savings accounts.