A Life Insurance Guide for New Parents – Compass Insurance Advisors
  • Estimated reading time: 4 minutes

    Having a baby changes everything. If you’re thinking about starting a family soon, there’s lots to consider. Even if you aren’t a parent yet, life insurance shouldn’t be on the backburner. With a growing family, it’s important to understand the ins and outs of life insurance. Here’s what you need to know. 

    The Cost of Raising a Child

    Let’s cut to the chase. Kids are expensive to raise. 

    Getting your bundle of joy from the crib to college costs a lot of money. According to a study the US Department of Agriculture (USDA), an average middle-income family can expect to spend approximately $233,000 to raise a child through the age of 17. This number includes the cost of your home or apartment, as well as daily necessities such as food and childcare. However, this doesn’t even include higher education. 

    Add college into the mix and your costs become higher. While your family might qualify for financial aid, it may not be enough to cover the rising costs of college. 

    Whether you’re already a parent or just starting a family, many financial and insurance experts recommend that you understand the cost of having a family and how life insurance can protect your loved ones in the event that you pass unexpectedly. As a guideline, make sure you select a coverage amount that covers your loved ones for the amount that covers your loved ones for the number of years that you expect them to rely on your income. 

    Do I Really Need Life Insurance?

    Every parent should consider having life insurance. While you may have an existing life insurance policy through your employer, it may not be enough once you become a new parent. Life insurance gives parents peace of mind in knowing that their children will be provided for no matter what. As you expand your household, you may take on large debts, such as a mortgage or a new car. New parents should think of life insurance as far more than an optional financial product. Life insurance is an essential part of planning for the future. It’s there to help protect your family in the long run, no matter what happens tomorrow or down the road. 

    Common Questions

    Do stay-at-home parents need life insurance? 

    If you’re a stay-at-home parent, you should also consider taking on a life insurance policy. Why? Think of all the value you provide to your family as a stay-at-home parent. Replacing childcare alone would upwards of $16,000 per year — add on a housekeeper and it’s easy to see how a surviving parent would be left seriously struggling. In fact, if a stay-at-home parent made an annual salary, it would amount to about $162,000 according to Salary.com. 

    All of these costs add up and can be especially daunting during a stressful t ime when the family is trying to get back on their feet. So don’t underestimate your value as a stay-at-home parent. Having a life insurance policy is another way to bridge the financial gap when your family needs it. 

    How do beneficiaries work? 

    A beneficiary is the person, persons, or designated trust that receives your life insurance policy proceeds if you die while your policy is in force. As the policy owner, you designate your primary beneficiary (or beneficiaries) when you fill out your application. 

    For many parents, the primary beneficiary is usually your spouse, your life partner, or your children. Once you choose a life insurance policy that best suits your family’s needs, you’ll have peace of mind knowing that you’ve taken a tremendous step to protect your family’s financial future. Life insurance will be there to help replace income, pay off debt, cover education costs, and alleviate living expenses that may pop up for your family, for years to come.

    How much life insurance do new parents need and what will it cost? 

    There’s no one-size-fits-all answer to how much life insurance your family needs, especially if your family is growing. Many people want enough coverage to help take care of all of life’s expenses, including home mortgages, college tuition, and everyday living costs. There are many different factors to consider. 

    The goal of purchasing life insurance isn’t just to replace your earnings, but protect your loved ones from financial crises. Think of all the significant financial obligations that may be left behind if you died unexpectedly — from your home and business to debts that you’ve cosigned on. =

    A simple rule of thumb is to multiply your salary by 10 to replace lost income. Then you’ll want to add on any debt you might have, including mortgage payments, estimated education costs, child and general household care, and other daily expenses. You may also want to add extra coverage that would help cover your spouse’s income for a year or two, so that the surviving parent wouldn’t have to worry about returning to work immediately while grieving. If your spouse is a stay-at-home parent, consider adding a rough estimate of what their annual salary would be if they suddenly had to return to work. Learn more about choosing the right type of life insurance plan and how much a life insurance policy will cost to protect your family. 

  • Leave a Reply

    Your email address will not be published. Required fields are marked *

Need Help?

Speak To A Certified Compass Agent Today!

(801)901-3519

Monday - Friday 8:00 am - 9:00 PM


Or Find Affordable Insurance Plans

Related Articles

Dynamic Blog Short Description

  • Health Insurance for Pre Existing Conditions

    What types of health insurance policies will cover preexisting conditions? In this article, we are going to walk you through what you need to know if you or anyone you know needs coverage due to a pre-existing condition. We will inform you of which insurance plans cover and which ones do not cover

    Read More
  • Who is eligible for the Health Insurance Marketplace?

    In 2010, the Health Insurance Marketplace was created by the Affordable Care Act (ACA) also known as Obamacare. Any United States citizen is eligible to apply for health insurance through the Marketplace, and many people will qualify for lowered monthly payments through an advance tax credit. If yo

    Read More
  • What is the Health Insurance Marketplace?

    Imagine a food market, a place where people come to purchase their produce, a Health insurance marketplace is a place where people seek to purchase an affordable health insurance plan. The insurance marketplace is a Federal service created in 2010 by the Affordable Care Act (ACA) also known as Obam

    Read More
  • How Much Does Health Insurance Cost?

    Your health insurance cost will be determined by a few factors. The main factor that determines your health insurance premiums is what federal advance premium tax credit you qualify for. Other factors include tobacco usage, location, age, plan structure, and number of dependents. Federal assista

    Read More
  • Health Insurance In Arizona

    Purchasing Health Insurance In Arizona Many states have joined in running their own Affordable Care Act exchange, however, Arizona is one of the states that still uses the Federal Affordable Care Act (ACA) exchange. Meaning, that they use the Federal marketplace and follow the dates for open enr

    Read More
  • Health Insurance In Nevada

    Purchasing Health Insurance In Nevada Nevada is one of the states that runs their own Affordable Care Act exchange. Meaning, that they don’t use the Federal marketplace. Instead, Nevada uses its own state’s marketplace for residents to choose a health insurance plan.  Medicaid/CHIP Me

    Read More
  • When is Open Enrollment?

    When is open Enrollment? Due to the significant impact of Covid-19, the Biden-Harris Administration extended the open enrollment for this year, giving people the opportunity to enroll in a healthcare plan for an extended period of of time. In most states, Open Enrollment will start November 1, 2

    Read More
  • Health Insurance for Self-Employment

    Finding health insurance for self employment can be daunting. My goal in this article is to help you understand the cost of qualified health insurance, how to save money on health insurance, and other potential solutions for affordable health insurance. Cost of Qualified Health Insurance for Sel

    Read More
  • Medicare Part D Notices Are Due Before Oct. 15, 2021

    Medicare Part D Notices Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable. Plan sponsor

    Read More

What Others Say About Us

Our Customers Love Us

Let Us Help You Find A Health Insurance Plan

No Extra Cost. Professional Guidance. Quick Analysis. Complete Protection. Simplified Enrollment. Personalized. Support.