While insurance is likely not on your mind, it’s important to plan for possible future events.

Expecting? Congratulations! If you are soon to be adding a new member to your family, there’s likely to be a lot on your mind. Finances, time off work, introducing your other family members to the new one, and so much more. It’s exciting, stressful, and overwhelming all at once. Chances are, thinking about things like life insurance is not currently in your books – especially because it may mean considering the possibility of yourself or your spouse passing away – but it’s crucial.

Why? Because when we become parents for the first time, life insurance is a guarantee that your dependents and the loved ones that you leave behind will have a means of financial stability without your income. This can give you and them a huge sense of comfort. Besides, life insurance really is not that expensive and a relatively simple purchase.

How does life insurance work?

Simply, life insurance is an insurance policy that you may purchase whether through a separate carrier or even where you work. You pay a monthly premium, sort of like a subscription, in order to maintain the insurance. When you choose a policy, you select a beneficiary – oftentimes your spouse – who will receive an insurance benefit in the event of your passing.

Life insurance is not just for people who are employed with children. If you are a parent or otherwise have people who are financially dependent on you, you need life insurance. Consider your financial situation. Debt. If you or your spouse were to pass away, how would you supplement that income? If you don’t work but you take care of your children full-time, how would that service be replaced? Life insurance may even offer compensation to replace your care with daycare or a nanny – which, without insurance, may start to rack up the bills.

Even if you are single, you may want to purchase life insurance. If you had any debt, you wouldn’t want it to pass on to your heirs or other family. This includes credit card debt, student loans, mortgage, etc.

What life insurance do I need as a new parent?

There are numerous different types of life insurance you can purchase, but they can be grouped into two: term life insurance and permanent life insurance. For the most part, healthy, young parents will opt to purchase term life insurance, as it is typically more affordable than the alternative. This is also the typical choice because you can purchase a term policy for a pre-selected period of time – i.e, the period of time that your children will be financially dependent (for 18-25 years, give or take) and the expiration date on your policy may just make sense for your circumstances.

The major difference between the two policies is this: term life insurance only covers you for a set number of years. Policies may be purchasable for periods of 10, 20, or even 30 years. Should you pass away during the time that you are covered, your beneficiary will then receive your death benefit.

Permanent life insurance, on the other hand, is typically more expensive, lasts a full lifetime, and when you pass away your beneficiary will receive a payment in addition to a “cash value.” During your insured period, you can borrow from this amount if you choose.

How much is life insurance for a new parent?

Life insurance is one of the most affordable insurance policies out there. You might be surprised at how little it actually does cost. The younger you are when you first purchase your policy, the lower your rates will be over time. Premium prices go up as you age, so it’s a good idea to purchase your plan when you are in your 20s or 30s! As long as you are in good health, your life insurance is unlikely to go over your budget. You may even expect to pay as little as around $100-$300 per year.

Should I purchase my policy before or after my baby is born?

If you are about to have a baby, it may be a good idea to buy life insurance now. Why? Well, it’s fresh on your mind and there’s less to do leading up to having a baby than there is when you have a newborn. Life insurance before having kids can even help you to secure a lower rate as well as puts a financial safety net in place for any stay-at-home parents. You’ll get a better rate and it helps you to start on a contingency plan. Many parents want to leave some money to their children and/or spouse, and starting young can help you out immensely when the time does come.

Even after you have chosen a life insurance plan, you’ll want to reevaluate your policy and needs regularly. If there are big life changes, like if you move houses or add another baby, you’ll want to increase your coverage. You may even choose to personalize your policy with supplemental coverage called “riders.” You can add these to any basic policy, as long as you are eligible. You should do insurance assessments as regular as possible – probably annually – so that if you are under-insured, there is little wait time before you get the coverage you need.