Just Had Kids? It’s Time To Review Your Life Insurance

This is definitely something to consider, considering the cost of raising a child these days.

Having children changes many things in your life. That means having to incur additional costs, from health care to childcare, and it means having to balance your time so that you’re caring for your children while still meeting work-related obligations.

There are a number of important financial steps you must take once you have children. First, it’s important to change your household budget to account for extra expenses — things like extra clothing, food, and even entertainment. You should also aim to fill your savings account so you’re prepared for emergencies and unplanned expenses related to your children, such as medical bills. And you should definitely consider increasing your life insurance coverage if you buy a policy before you have kids.

Is your coverage sufficient?

The whole purpose of life insurance is to protect your loved ones financially. But let’s say you buy life insurance when it’s just you and your partner. Just as you spend more money raising children than just living as a couple, so you may need more money in the form of life insurance benefits if you die and leave the children behind.

You may also need to look at the length of your policy if you have term life insurance. Maybe you implemented a 10 year policy when it was just you and your partner. You may want a coverage period that is long enough to cover your children into early adulthood. So upgrading your coverage from a 10 year policy to a 20 or 30 year policy can make a lot of sense. And it can give you peace of mind as a parent.

Important expenses not to be overlooked

When you’re in the throes of raising a child, the bills can add up. In fact, in 2017, the US Department of Agriculture projected it would cost an average of $284,594 to raise a child up to age 17. But then inflation happened. And now, because of the generally higher cost of living, the Brookings Institution has adjusted that figure to $310,605.

Having to shell out money for life insurance — or additional coverage — may not be the easiest thing to do considering what it costs you. But it’s a cost worth prioritizing, specifically considering the cost of raising a child today. If you pass away and leave your surviving spouse to raise children of your own, that spouse may really struggle financially.

Prioritize adding life insurance coverage

Many parents will stop at nothing to protect their children financially. Buying life insurance is the best way to do it. So if that means enhancing existing coverage, and/or extending it, that’s something to focus on sooner rather than later.

That said, it’s always a good idea to shop around when buying life insurance – whether for the first time or in the context of increasing your coverage. At a time when you’re also grappling with the costs of raising a child, any savings can go a long way.