Why Do Parents Need Life Insurance?

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Every parent wants the best for their children. Every parent wants to protect their children. Life insurance allows parents to do so in the event you are not here to take care of them.

Protection for your child’s future

Raising a child is the hardest and most rewarding experience.

From the first moment you hold your child in your arms, you dream of their future and how you can help guide them to thrive in life. However, the cost of creating that future can be a considerable financial challenge. This burden can be devastating for a family that has recently lost a parent.

Life insurance provides peace of mind that if you passed away, you can still provide financial stability and protection for your family. Life insurance can cover the financial costs of food, shelter, clothing, diapers, and activities all the way to their college tuition.

The money you receive from your life insurance policy would allow your spouse, partner or child’s guardian to give the future you envisioned for your child.

How life insurance works

In the event of a death, life insurance provides money to anyone that depends on your income. The person that received the money is your beneficiary. This person can be anyone you choose and is typically your spouse, partner or child.

If you would like to name your child as a beneficiary, this is possible however, there are a few extra steps to consider.

  • If your child is a minor, it would be wise for you to also name a contingent beneficiary or custodian. This individual would look after the funds until your child reaches age 18. This is someone you should keenly trust and who also agrees to take on that responsibility.

The first step towards purchasing life insurance is agreeing that yes, you would like to invest in life insurance. Now it is time take action. Life is short and you never know when something unexpected could happen. Once you say yes, take the steps necessary to sign a life insurance policy.

Remember life insurance isn’t for you, it’s for the loved ones you leave behind.

Learn more…How Life Insurance Works

Determining your life insurance coverage

The next step is to determine what your family needs are in order to choose the most effective life insurance coverage. This money is called the death benefit. You choose the amount of coverage you need, how long you will need it and then pay your premiums either monthly or annually.

To determine your coverage, the two most important questions to ask are:

  1. How much money would my family need to cover immediate expenses? (ie: funeral, debt, monthly rent or mortgage, car payments, everyday bills…)
  2. How much income will be needed in the future to support my family’s long term needs (ie: college tuition, retirement..)

Wealtha’s life insurance calculator can help you determine your life insurance coverage based on your unique family financial needs.

Life insurance needs are different for each family

We realize that no family is the same, but what all parents want is to protect their children should they not be there to care for them. This means that based on your family structure, your coverage needs will be different as well.

  • If both your partner and yourself work in order to meet your financial needs, then it is important that both parents have a life insurance policy, not just the highest paid parent.
  • If one of the parents is a stay at home parent, you will need to consider how the working parent would be able to take care of the children without the role of the stay at home parent. For instance, if your stay at home partner takes care of your children in the day, then you may need to pay for daycare services.
  • If you are a couple but not married, you will have to prove that you have insurable interest as a couple, and also name your life partner as your beneficiary.
  • If you are a single parent, it is even more important to have life insurance as there is no other parent to support your child financially. Decide who will take care of your children and who would be in charge of the life insurance death benefit. The responsibilities may be for same person or not. Whoever is in charge of the death benefit should be named the contingent beneficiary in the case your children are minors.
  • If you are divorced, life insurance is still necessary. Many divorce agreements require the noncustodial parent to have a life insurance policy in order to cover their child support payments. You can name your child as your beneficiary however, you would want to choose a contingent beneficiary if you children are minors. This could be your ex-spouse, a trusted family member or close friend.
  • If you are getting divorced with an existing life insurance policy and your spouse is your beneficiary you may change this depending on your life insurance policy. When you purchase life insurance, is important to understand its policies so you have the option to change your beneficiary as your children.

What type of life insurance to choose

Though there are a number of different kinds of life insurance, The most common being term and whole life insurance.

Term Life Insurance

Term life insurance is coverage for a set amount of time (term). It the simplest and most affordable life insurance.

For a family with a significant mortgage, this is the best type of life insurance to purchase.

For example, as a new parent, who may have just recently bought a house, you will need more coverage now then when your children graduate college. After the term ends, which could be 10 to 30 years, the amount of coverage you would need would be significantly less. Your mortgage will have decreased or been paid off and your children would be financially independent. You can renew your life insurance before it expires or you can buy a new policy. However, your rates will go up as you age.

The most important benefits for young parents is that it is inexpensive and still provides a large amount of coverage.

This type of life insurance is what Wealtha recommends for new parents.

Whole life insurance

Whole life insurance is a type of permanent life insurance that protects your family for your lifetime. Your premiums are locked in and stay the same throughout your life. Every time you make a payment a portion of that money is set aside as a nest egg for your future.

This type of insurance seems appealing because of the locked in premium rate. There is a cost as the premiums are high compared to term with similar coverage amounts.


Discussing about losing a loved one is definitely not a conversation you want to have. Realistically, death is a something that will happen. Avoiding the topic is not going to change that.

All we can do as parents is set our family up for success with or without us. That is a why life insurance is so important. Do your research, discuss with your partner and make the decision to get life insurance. Your children and the spouse you leave behind will be so thankful.