Insuring Your Baby’s Financial Future: Life Insurance For Parents

Help protect your growing family by ensuring you have enough life insurance.

Welcoming your first child changes everything, from social activities and date night, to the family budget. While every parent handles a happy new addition differently, one sentiment prevails: Parents will do nearly anything to support their children, now and into the future.

Raising a child through age 17 in the United States costs an estimated $233,610,¹ according to the Center for Nutrition Policy and Promotion. And that’s not including higher education costs, a mortgage and other household expenses.

In contrast with this hefty responsibility, 38 percent² of parents have only employer-provided life insurance, which typically covers just one to two times their annual salary. For stay-at-home parents, there is also a need for coverage, as child care alone can cost up to $17,000³ per year.

By purchasing an individual life insurance policy, you are helping to protect your family’s financial future – and giving yourself financial reassurance.

Crunching the Numbers

Every family has expenses that continue to grow along with the household. After the birth of a child, many parents commit to saving a certain amount each year for tuition or an endowment for their child’s future.

“If something were to happen before you can fulfill that savings plan, a life insurance policy can help get it done, providing that peace of mind,” says Todd Oster, Assistant Vice President at Amica Life. “And it can be done for just $1, $2 or $3 a day,” depending on your age, health and the amount you need.

Families with a stay-at-home parent need to consider the cost of filling that role, which includes more than just child care and household responsibilities. A recent survey from Salary.com⁴ estimates the financial value of a stay-at-home parent at $143,000 a year.

Life insurance benefits can also help cover mortgage costs, credit card, student loan or medical debt, funeral costs, and everyday expenses. During the emotionally stressful time following a loss, life insurance can alleviate much of the anxiety a family might have about their financial future.

By purchasing an individual life insurance policy, you are helping to protect your family’s financial future – and giving yourself financial reassurance.

Every family has its own life insurance needs, depending on savings, debt and current and future expenses. If you determine you need more coverage than you can currently afford, Oster recommends starting with a policy within your budget.

“As time goes on, you can always add to that coverage,” he says.

After you determine how much coverage you need, the next decision is the type of policy (or mix of policies).

What Type of Insurance is Best for Your Family?

Here are two of the most common types of life insurance.

Term Life Insurance: This policy covers you for a specific amount of time, typically a period of 10, 15, 20, 25 or 30 years. The cost and the coverage typically stay the same for the length of the policy.

Permanent Life Insurance: This policy covers you for your lifetime, as long as the premiums are paid. In addition, over time this policy builds cash value, which can be used to pay premiums or other expenses as the policy matures.

If you aren’t sure which type of policy is best for your family’s needs, an Amica Life insurance specialist can guide you through this process. It might make sense to have a combination of policies, because your life insurance needs may change over time as your children grow up and become more independent, Oster points out.

“Your mortgage won’t always be what it is now, and your kids will graduate from college someday,” he says. “You can work with your representative to determine what makes sense” for the long run. But when it comes to protecting your new baby, “the most important part is getting the coverage in place.”

• Expenditures on Children by Families, United States Department of Agriculture (USDA), Center for Nutrition Policy and Promotion, 2015.
• 2016 Amica Life Financial Peace of Mind Survey, 2016.
• Parents and the High Cost of Child Care, Child Care Aware^® of America, 2015.
• 2016 Stay-at-Home Mom Salary, Salary.com, 2016.

ALIC34818 (exp. 12/19)