Life Insurance for New Parents

You might be distracted right now, but this stuff is important.

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term life parents

Are you thinking about starting a family? Are you expecting your first baby? Are you already knee-deep in diapers and long, wonderfully sleepless nights?

Congratulations! At the moment, you’ve probably got your hands full. (Now wash those hands, because babies are adorable germ factories.) But while you’re pondering whether to splurge on a Snoo, or freaking out after finally Googling daycare tuition in your neighborhood, it’s important to consider the future.

Like, the distant future—the one in which your little one is no longer so little, and you might not be there to support them.

Pondering that reality can be a bummer, but it’s also a responsible way to give your growing family some well-deserved peace of mind. We all want to live long enough to see our children grow up and start their own families. No one expects life to take an unfortunate turn of events. But creating a financial safety net for your children is one of the most important things you can do as a parent.

Let’s take a look at some of the options that are available to you.

How does it work?

Term life policies offered by Lemonade start at $8 a month. You can choose a policy with a “term” lasting from 10 to 40 years, with coverage offerings ranging from $100,000 up to an unlimited maximum benefit. (FYI, when we talk about ‘how much coverage’ a plan has, we’re really talking about the total value of the death benefit your beneficiaries would receive in the event of your passing.) 

If you’re married or in a relationship, it’s common to name your spouse or partner as your policy’s primary beneficiary. But this isn’t a concrete rule.

You can also name a guardian, or set up a life insurance trust to hold the money in your children’s name until they reach adulthood. If you set up a trust, you must appoint a trustee to manage it according to your instructions and ensure that your young children are taken care of until they reach adulthood.

The best time to get life insurance

As for the ideal time to get a life insurance policy, it’s a personal question. As a parent, you want to do everything in your power to protect your family. Life insurance tends to be more affordable when you’re younger and healthier, so it’s a good idea to sign up soon, and lock in a cheaper premium.

Your financial responsibilities change when you become a parent, so having the right coverage is essential. Here are a few things that are important for you to remember as a new parent when considering life insurance:

The sooner you buy, the cheaper it might be

The cost of life insurance tends to go up as you get older. Purchasing now while the rates are reasonably low can help you save money. You should consider getting covered even before you discuss having a baby with your partner so that you can search for the lowest insurance rates possible.

Consider applying during the first trimester of your pregnancy in advance of any possible health complications later on

While we hope this will never happen to you, health complications (like high blood pressure or gestational diabetes) that come toward the end of the first and second trimesters can make coverage more expensive, or disqualify you altogether.

And, in the unlikely event that something goes wrong (including complications during labor), getting life insurance coverage sooner in your pregnancy is a sound idea.

Your life is about to get a whole lot busier

Life becomes a blur of bottles, stroller naps, and snuggles pretty fast once your baby is born. If you take care of life insurance early on, you’ll have fewer distractions. If you wait until your new family member arrives,this vital task might just slip through the cracks.

Which kind of life insurance should I get?

Now that you are leaning toward buying some sort of life insurance policy, finding the coverage you need can feel daunting. Although there are numerous types of life insurance products in the market, the two most common types of coverage you’ve probably heard of are term life and whole life insurance.

Note: Lemonade only offers term life insurance policies, but we’ll give you the lowdown on both policies to help you decide which kind of life insurance will best help secure the financial future of your loved ones.

Term life insurance vs. whole life insurance (aka permanent life insurance)

A term life insurance policy only covers a certain number of years. Depending on your insurance needs, you can choose a 10-, 15-, 20-, 25-, 30-, 35-,  or 40-year term. If you die before the end of your term, your beneficiaries will receive your death benefit.

Term life insurance might be a tempting option for expecting parents due to its affordability and flexibility. It allows you to financially protect your child(ren) till they become independent. Depending on your insurer, you might be required to complete a medical exam for approval..

With whole or “permanent” life insurance, you don’t have to limit your coverage to a set number of years. Permanent life insurance remains in force as long as you’re alive and continue to make payments.

Children who depend financially on their parents can benefit from that protection. For instance, a permanent life insurance plan can meet your child’s financial needs for the rest of their life if they have a disability.

Do both parents need life insurance, or just one?

Your young family would potentially be in a difficult financial situation if either parent were to pass away. So it could be a good idea to consider policies for both parents, whether you’re working for a salary, or working as a stay-at-home parent.

It would be difficult for a surviving parent to replace the valuable services a stay-at-home parent provides, such as child care. Additionally, a life insurance payout could allow the surviving breadwinner to take a few years off work while the family regains its footing.

Naming beneficiaries

Typically, you name a beneficiary when you purchase a life insurance policy, such as your spouse. Even if you intend to use the money to help your children, it can get a bit complicated to name them. Life insurance companies cannot pay a minor beneficiary’s benefit when you die until the court appoints a guardian.

An alternative is to create a life insurance trust and name it as the beneficiary of your children’s money and property. The trustee is someone you choose, such as your spouse or another adult. You can set up a trust with the help of an attorney, and the life insurance company can help you create a beneficiary designation in the trust.

How much life insurance do new parents need?

One purpose of life insurance benefits is to help replace any income you would have provided for your family if you hadn’t died. Expecting parents may need more life insurance than parents with older children, because they will have more expenses. By some estimates, the average cost of raising a child until the age of 18 in the US is almost a quarter-million dollars.

One common refrain is that you should buy coverage equal to at least 10 to 15 times your annual income. If you are looking at plans and trying to figure out how much you need, here are some things to consider (while keeping in mind any savings you might have in the bank at the moment):

  • Financial contributions (i.e., your salary)
  • Mortgage and/or rent costs
  • Childcare expenses (daycare and college tuition, etc.)
  • Other child-rearing expenses (camp fees, art classes, and other extracurricular expenses).
  • Family expenses or bills
  • Death, taxes, and funeral expenses
  • Long-term care expenses

After making those personal calculations, you want to ensure that your policy’s death benefit provides sufficient coverage to your beneficiaries. At Lemonade, our term life coverage ranges from $100,000 up to an unlimited maximum benefit (meaning this is the amount your beneficiaries may receive in the event of a covered claim).

How are life insurance premiums calculated?

A life insurance policy’s annual price depends on the type of policy you buy, the company from which you purchase it, the amount of coverage, and the policy’s term. The price can also be affected by some of the following factors:

  • Age: The younger you are, the lower the rates likely are
  • Sex: Women generally pay less than men do
  • Health: If you are in good health and don’t smoke, you’ll probably pay less.
  • Lifestyle: If you have a risky career or engage in dangerous hobbies (like climbing Everest a few times a year), your rates will likely be considerably higher

Signing up for a life insurance policy as a new parent with Lemonade

We understand how busy you are. You barely have time to sneak a shower, let alone think about complicated insurance policies! 

But, at Lemonade, we’ve tried to make the process as seamless as possible. You’ll start the application on the Lemonade website or app, where you’ll answer a few basic questions about yourself and your health. From that point, we’ll transfer you to our partners, Legal & General, who will help you customize your policy and complete your application. 

In some cases, you may be able to skip the medical exam and get a quote right away. In other cases, you may be required to answer a few additional questions that could take 2-10 days for an underwriter to review. And, depending on your circumstances, you might be asked to complete a medical exam that could mean waiting 10-30 days for a final decision about coverage. 

The application process is straightforward and simple, and we and our partners at Legal & General will walk you through each step.

Click below to get started now—you’ll be moving one step closer to helping protect your family against life’s twists and turns.

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A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage may not be available in all states.


Please note: Lemonade articles and other editorial content are meant for educational purposes only, and should not be relied upon instead of professional legal, insurance or financial advice. The content of these educational articles does not alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. While we regularly review previously published content to ensure it is accurate and up-to-date, there may be instances in which legal conditions or policy details have changed since publication. Any hypothetical examples used in Lemonade editorial content are purely expositional. Hypothetical examples do not alter or bind Lemonade to any application of your insurance policy to the particular facts and circumstances of any actual claim.