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Updated: Published:
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USAA Life Insurance Company and USAA Life Insurance Company of New York.
Summary
Ensuring that your loved ones are cared for is a priority for most parents, especially new parents who suddenly find themselves with added responsibilities. One of the most effective ways to protect your family financially in the event of your passing is by having life insurance.
Key takeaways
- Life insurance can help cover the surviving parent or guardian's costs related to raising a child, including paying for college, if a parent dies.
- There are two main types of life insurance, term life and permanent life.
- With term life insurance, you're covered for a set time period. Your premiums can stay level for a certain period of time, such as 10 or 20 years, or increase annually.
- Permanent life insurance offers potentially lifetime protection, and you may be able to access your policy's cash value during your life.
Whether you're preparing to add to your family or you've just had your first baby, one thing is certain: The early days of parenthood can be exhausting, and there's probably a lot on your mind. Whether you've adopted a child or are in the midst of late-night feedings and diaper changes, you might also be thinking about your finances.
Many new parents, both stay-at-home parents and working parents, share that feeling of financial stress. For good reason: The average cost of raising a child is more than $325,000, according to an inflation-adjusted estimate of the U.S. Department of Agriculture's report. Since 1960, the USDA has been tracking the cost of raising a child through the age of 17.
How would your family cover those expenses if something were to happen to you or your spouse? One of the best tools you have to protect your loved ones' financial well-being is life insurance. In the event of a parent's death, life insurance can cover final expenses and contribute to all the costs associated with raising a child, including their college education, which isn't included in the USDA's estimate.
And, just knowing that you own a life insurance policy can go a long way toward your peace of mind because you know you're doing all you can to protect your family.
Life insurance for new parents
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Description of visual information: [Information Courtesy of USAA Life Insurance Company and USAA Life Insurance Company of New York] End of description.
Whether you're a new parent or getting ready to grow your family, you've got a lot on your mind. And finances are likely a part of that. Not only are you budgeting for diapers and daycare, but you may also be worrying about topics you've never thought about before, like: What would happen to my family's finances if I were to die unexpectedly?
This is where life insurance comes into play. It can help add peace of mind and financial security for the family you're building. As a new parent, getting life insurance is often easier than you may think. To start, you may review employee benefits that you or your spouse have available.
Often employers will offer some form of group life insurance for little to no cost. In many cases, though, that's not enough. So, you'll still have to buy a stand-alone policy to get the full protection you need.
There are two main types of life insurance policies: term policies and permanent policies.
If you're just starting out, a term policy may be your first consideration. Term policies provide simple life insurance protection in exchange for affordable premium payments. The premiums either increase yearly or stay level for a set duration. You'll be covered until you reach the age where the policy expires or you decide to cancel coverage.
On the other hand, permanent life insurance is coverage that's meant to last a lifetime. Although your premiums may be higher, you'll have coverage that's there for old age and can build cash value. Both options typically include a child rider, which offers added protection for your kids. If your budget allows, you can also set up a stand-alone life insurance policy on your child.
How much life insurance should you get?
Consider the LIFE acronym:
L: Liabilities.
How much money would it take to pay off all your debts?
I: Income.
How much of your income will your family need to live comfortably after you're gone?
F: Final expenses.
How much should be set aside for the funeral and any final medical expenses?
E: Education goals.
How much would your children need to pay for their education goals?
No one knows what the future holds. With life insurance, you can rest easy knowing that your family will be protected. Call us at 800-531-LIFE (5433) to learn more about our life insurance products.
Description of visual information: [Visit usaa.com/life to learn more or call 800-531-LIFE (5433).
This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.
Life insurance and annuities provided by USAA Life Insurance Company, San Antonio, TX and in New York by USAA Life Insurance Company of New York, Highland Falls, NY. All insurance products are subject to state availability, issue limitations and contractual terms and conditions. Each company has sole financial responsibility for its own products.
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