The One Thing Financially Secure Parents Do That Others Put Off

If you ask any parent who is financially secure about the way in which they finally arranged for life insurance, the story you’ll hear is generally the same. Instead of putting off becoming an expert on the different policies, they decided to treat the matter as if it could be completed in a single session.

At PolicyBull, we talk to parents who have been meaning to get covered for well over a year, and the reason is almost always the same. Since many people never take the time to work out what they really need, the decision is continually put off until later. Parents who already had coverage generally didn’t treat it as a research project; instead, they would sit down once, choose a plan, and then be done with it.

What Financially Secure Parents Actually Do

To these parents, paying for life insurance seems much more similar to renewing car insurance than it does to making a significant financial decision. They usually go for term life insurance rather than a whole life policy, which comes with all those extra features, since the term type is the only thing they really need.

They settle on a sum assured using a simple rule of thumb, that is about ten times their annual income, occasionally including the future cost of their child’s college education, after which they go on with the week. Instead of spending a month going from one insurance company to another, they have just come to the conclusion that having a reasonable policy in place now is better than having a perfect one that they keep intending to purchase.

Why Parents Need Life Insurance In The First Place

When you have a child relying on you, your income ceases to be entirely your own. In the case where you are the parent who works outside the home, your salary is probably paying for a substantial part of the mortgage, the groceries, and the usual expenses of running the household. But if you are the parent who stays at home with the children, the work you’re doing would actually cost a considerable amount of money to replace, whether it’s childcare or the numerous small tasks that go unnoticed until they cease to be carried out.

This is really the heart of why new parents need life insurance. It is not just about replacing a paycheck. It is about covering funeral costs, which typically fall somewhere between seven and ten thousand dollars, and making sure a surviving partner never has to sell the family home to settle debt. It also means your kids’ education plans do not quietly disappear along with your income.

Why So Many Parents Keep Putting It Off

The same two points are repeatedly mentioned. Firstly, most people think that the cost of insurance is much higher than it really is. A healthy, non-smoking parent in their early thirties is often able to get coverage of five hundred thousand dollars for about thirty-five dollars a month, which is roughly the price of making a couple of coffee runs each week, although your exact rate will always depend on your age, health, and the insurance company you select.

Second, people wait for a more suitable time; they tell themselves that they will deal with it after they have been promoted, after they move, or once the school year has settled down. However, that more suitable time usually does not arrive on schedule, and each year spent waiting generally means having to pay more for the same level of coverage as the previous year.

What Waiting Actually Costs You

The amount you pay is mainly determined by your age and health, so the calculations involved here are quite simple. The type of coverage that is affordable in your thirties can cost two or three times as much when you get to your fifties, and the costs keep rising afterward.

This isn’t intended to frighten you into taking action; it’s simply the way the pricing is structured. The longer you wait each year, the more you end up with a slightly less favorable rate than the previous year, and if a health problem arises in the meantime, your choices can become even more limited. The reason for purchasing when you are young and in good health is so that you lock in the most affordable type of coverage that your family already knows it will require.

Term Life Insurance For Parents, Explained Simply

Term life insurance is based on a simple principle: you choose a period of time, typically twenty or thirty years, and also decide on the sum of coverage, with your premium generally remaining the same throughout that time. Since there is no investment component and no cash value developing slowly in the background, there is nothing complicated lurking underneath.

It is precisely because of its simplicity that it is such a good option for most young families; it provides coverage during the years when your children actually rely on you, while your mortgage is still unpaid and your income is taking the main burden. When the term ends—typically just about the time when the children have grown up, and the house is paid off—most parents usually no longer need such a high level of coverage.

When Should Parents Get Life Insurance

The truth is, it’s something you won’t even have to think about. As soon as the child is born or even when you’re expecting, this is generally the cheapest and simplest time to lock in a rate, because at that point you are probably younger and in better health than you will be at any later date when the insurance company is assessing your case.

It’s all right if your child is already several years old and you still don’t have coverage; the best time to act is now, not once you’ve waited for whatever milestone you’ve been putting off.

How To Get It Done In Under Twenty Minutes

Begin with a rough figure; multiply your income by about ten, and that will give you a sensible target for your coverage. Next, choose a term length that corresponds to the period of your largest commitments, typically until your youngest child reaches eighteen or your mortgage has been paid off.

Once you’ve reached that point, obtaining a quote can be quick. A solid online process is designed to guide parents through it all without requiring a lot of paperwork or involving unnecessary back-and-forth communication. You need to answer a few straightforward questions regarding your health, compare a few figures, and then make your choice. That really is about all there is to the process, and in many cases it turns out to be simpler than deciding on a health plan when open enrollment is taking place.