Life insurance for new parents
Thinking about having a baby or already have children? One of your foremost concerns may be how to protect your family in case something happens to you. Life insurance for new parents is critical for safeguarding your children’s futures and ensuring financial security for your growing family.
Whether you’re a new parent or planning to become one soon, life insurance is essential for ensuring your family’s financial security
Why new parents need life insurance
Becoming a parent means your financial plans now include the people who depend on you most—your children. For at least the first 18 years of their lives, your children rely on your income and support, making life insurance for new parents an essential safety net for replacing lost income if something happens to you.
Here’s how life insurance works: upon your death, a payout is made to your designated beneficiary. While your child can be named as a beneficiary, it’s often more practical to choose a spouse, co-parent, or an adult guardian, such as a grandparent or sibling.
This financial cushion can help cover:
- Housing and everyday living expenses
- Funeral costs
- College tuition
- Other major expenses that your family may struggle to pay for without your income.
Life insurance ensures your family has the resources they need to thrive, even in the most challenging times.
Benefits of life insurance for new parents
Life insurance offers peace of mind and financial flexibility for your loved ones, ensuring they’re protected in any situation. Here’s why it’s a must for new parents:
- No restrictions on how benefits are used
Life insurance benefits go directly to your beneficiaries without restrictions. Unlike assets distributed through a will, there are no legal strings attached. This means your loved ones can use the payout for immediate needs like covering rent or mortgage payments, paying off debts, or long-term goals such as college savings, investments, or even starting a business. - Tax-free benefits
In most cases, life insurance benefits are tax-free.1 This means your family avoids additional tax burdens or fees, letting them focus on what matters most. - Stays out of probate
Life insurance benefits typically bypass probate, the legal process of settling a deceased person’s estate. This process can be time-consuming and may involve court supervision to ensure debts are paid and assets are distributed according to a will or state laws. By avoiding probate, life insurance benefits are delivered directly to your beneficiaries, ensuring a faster, hassle-free process for your loved ones.2
While having a will or trust is always wise to ensure your overall wishes are followed, you don’t need one to name a life insurance beneficiary. This makes life insurance a straightforward and efficient way to provide financial security.
Good to know: LegacyShield, included with every SBLI policy, offers a secure and robust digital solution for all aspects of legacy management, from storing important documents and financial accounts to estate planning.3 - Cash value options
Certain policies, like whole life insurance, build cash value over time. This added financial feature can be part of a smart plan to create a legacy for your children while still providing a safety net for your family.
As a new parent, life insurance isn’t just a financial tool—it’s a commitment to your family’s future security and success.
What’s the reason I’m buying life insurance? »
When should new parents buy life insurance?
For new parents, the earlier you purchase life insurance, the better. Here are the key stages to consider getting coverage:
If you’ve recently grown your family
It’s never too late to protect your family. Buying life insurance after having a baby allows you to evaluate how much coverage you need and find the right policy to fit your family’s unique situation.
If you’re expecting or planning to have a child soon
This is an excellent time to research and apply for coverage. Processing an application typically takes about five weeks, so starting early ensures your policy is in place when your baby arrives. Plus, it’s easier to determine coverage needs based on your current and expected household income.
If you plan to have children in the next 5–10 years
Even if kids are a few years down the road, locking in life insurance now is smart. Premiums are based on your age and health, so buying early helps secure lower rates and gives more time to build cash value if you choose whole life insurance.
Factors to consider for new parents
When choosing life insurance, keep these factors in mind:
- Number of children you plan to have: This influences how much coverage you’ll need.
- Household income: Helps determine eligibility and the right coverage amount.
- Financial obligations: Think about paying off your mortgage, debts, and future expenses like higher education.
Should you name your child as a beneficiary?
It may seem logical, but naming a minor as a beneficiary isn’t ideal. Children under 18 cannot directly access life insurance payouts, which could result in court costs and delays. Instead, consider:
- Naming a spouse, co-parent, or trusted adult guardian as the beneficiary.
- Setting up a life insurance trust with the help of an attorney. This ensures funds are managed appropriately until your child comes of age.
Changing policy owners beneficiaries »
Determining the right coverage amount for life insurance for new parents
To find the right coverage for your family, consider:
- Annual income replacement (e.g., $80,000/year for 10 years = $800,000).
- $100,000 per child for major expenses like college.
- Outstanding debts, including mortgages and loans.
- Savings goals and final expenses.
Need help? Speak to a licensed agent for personalized guidance or use our life insurance calculator to determine the best life insurance for new parents and their families.
Life Insurance for all families
Whether you’re a working parent, a stay-at-home parent, or navigating parenthood on your own, life insurance is an essential step in planning for your family’s financial security. Here’s how to approach coverage based on your specific situation:
Working parents
For families with two working parents, life insurance helps protect the financial contributions each parent makes to the household. It ensures that if one parent is no longer there, the other can maintain the family’s lifestyle and cover important costs like housing, childcare, and education. It’s about creating a safety net so your family can keep moving forward.
Stay-at-home parents
Stay-at-home parents provide critical support to their families, from childcare to managing the home. While they may not earn an income, the value of their contributions is undeniable. Life insurance can help cover the cost of replacing these essential services, ensuring the family has the resources it needs during a challenging time.
Single parents
For single parents, life insurance is an especially important tool to provide financial security. As the sole provider, you’re already doing so much to create a strong foundation for your child’s future. Life insurance ensures that, no matter what, their needs will be covered—from everyday expenses to long-term goals like education.
And here’s the good news: life insurance is more affordable than many people think. For example, a 35-year-old, non-smoking female could purchase a $500,000, 20-year term policy for as low as $20.75 per month.4 It’s a small step that delivers big peace of mind for you and your family.
Why it matters
Life insurance is about providing the security and confidence your family deserves. It’s a way to ensure that no matter what life brings, the people you care about most are protected. By tailoring coverage to your unique situation, you can build a plan that supports your family’s future and reflects the love and care you’ve already put into their lives.
How much life insurance do I need? »
Types of life insurance policies
Term Life Insurance
Affordable and flexible, term life insurance provides coverage for a set period. Popular term lengths for new parents include:
- 10 years: Ideal for parents with older children nearing adulthood.
- 15 years: Great for young families planning ahead.
- 20 years: Perfect for families with younger children or significant age gaps.
Skip the medical exam with this fast, affordable option. While coverage amounts may be smaller, simple term life insurance may be perfect for parents needing immediate protection.
For those seeking to build a financial legacy, whole life insurance provides death benefits and cash value, making it a valuable long-term asset.
Choosing the right provider
Finding the right provider is key to getting the best value and service. SBLI offers a variety of life insurance options tailored to new parents, with a commitment to expert guidance and unmatched customer support.
Ready to get started? Protect your family’s future today. Get a quote using SBLI’s life insurance calculator or speak to a licensed agent at 800-650-4391 to learn more about life insurance for new parents.
1 This is designed for general informational purposes on the subjects covered and is not intended to be legal, tax, or investment advice. Information regarding the subjects covered may not constitute the most up-to-date available and no representations are made that the content is error-free. Further, pursuant to IRS Circular 230, it cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You should consult your own legal, tax, or investment advisor regarding your personal situation.
2 This is designed for general informational purposes on the subjects covered and is not intended to be legal, tax, or investment advice. Information regarding the subjects covered may not constitute the most up-to-date available and no representations are made that the content is error-free. Further, pursuant to IRS Circular 230, it cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You should consult your own legal, tax, or investment advisor regarding your personal situation.
3 SBLI has partnered with LegacyShield to provide certain products with your policy. Additional LegacyShield products may also be available for purchase. Your relationship or agreements with LegacyShield are separate from your relationship or agreements with SBLI. The kits you may be receiving access to through LegacyShield are not intended to be legal, tax, or investment advice. You should consult your own legal, tax, or investment advisor regarding your personal situation. LegacyShield is a subsidiary of SBLI.Products or Services offered under LegacyShield are not insurance and are subject to change. For more information, please contact SBLI at www.sbli.com or via telephone at 800-694-7254.
4 This rate is for a female, age 35, best class, 20-Year term policy with a face amount of $500,000. Monthly premiums are available only when using SBLI’s Automatic Payment Plan. Rates vary by age, gender, health, and amount of insurance. SBLI Term Life Insurance policy form series B-56.
5 Policy form series 20-P-SIT.
6Policy form series: 21-P-PWL & 21-P-PSPWL.