Many young parents assume life insurance is something to worry about later in life — but waiting could be a costly mistake. With the rising costs of childcare, education and everyday expenses, securing a financial safety net early is one of the smartest decisions parents can make.
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Not only is life insurance more affordable when purchased at a younger age, but it also ensures that your children and partner are financially protected in the event of the unexpected.
Here’s why getting life insurance sooner rather than later is a crucial step for parents looking to safeguard their family’s future.
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1. Ensure Income Replacement
This is the most essential reason to have life insurance: your income — or the value of the care you provide — helps keep your household running. If you work outside the home, your family almost certainly depends on your income. But even if you work inside the home, your caregiving role also carries significant financial value.
“Your family depends on the care you give, which would cost a lot of money for someone else to provide,” said Melanie Musson, a life insurance expert with the site QuickQuote.com.
A life insurance policy benefit can replace that income or cover the costs of childcare and other services if you pass away unexpectedly. The younger your children, the more years your family would need to make up for that shortfall — making coverage that much more crucial.
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2. Lock in Lower Premiums
The biggest benefit to getting life insurance when you’re young is that you’ll likely pay lower premiums due to your age and health status.
“If you lock into a 30-year term life insurance policy and you’re in your 20s, you’ll be paying the same premium when you’re 50 and could never dream of getting a policy so cheap,” Musson said.
However, according to Jason Turchin, Esq., a national life insurance lawyer, young couples should also be mindful of the type of policy they’re buying. Term life insurance expires after a set period, whereas whole life and universal life policies generally last a lifetime and may build cash value over time.
“They should also review their policy to see if it is an AD&D policy, or Accidental Death and Dismemberment policy, which often has many more limitations than a traditional life insurance policy,” he pointed out.
3. Plan for Divorce and Custody Scenarios
Though no couple plans to divorce, when buying life insurance, it’s important to discuss what would happen to the policy should the couple get divorced, Turchin said.
“Many states have a revocation-upon-divorce statute which will automatically deem the former spouse as deceased for life insurance purposes and will skip them upon the death of the insured,” he explained.
That means that if the couple wants the other to remain beneficiary after divorce to ensure the benefits are available for the children, they should not only discuss this pre-finalization of the divorce, but they should specifically name the policy and policy number in the divorce decree to avoid any possible dispute down the line.
4. Provide Long-term Financial Security for Your Children
Only the truly wealthy may be able to get by without life insurance. Most young parents are working hard to put food on the table, pay for housing, and cover the cost of their children’s extracurricular activities, Musson pointed out. Life insurance gives you peace of mind that, if you pass away, your kids will at the least have financial security.
“Losing a parent is a lot to go through. Losing a parent and losing your financial stability is even worse,” Musson said. An adequate life insurance policy can provide stability and consistency during an otherwise chaotic time.
5. Avoid Leaving Your Spouse With a Financial Burden
If you pass away and still owe money on your mortgage or have other big bills, your surviving partner may struggle to stay financially afloat, especially while raising children alone, Musson noted. And if you were the primary caregiver, they may suddenly need to pay for full-time childcare.
“A life insurance policy can pay off a mortgage and replace the income you no longer provide.”
6. Use Life Insurance as a Wealth-Building Tool
While most people think of life insurance solely as protection, it can also be a tool for building wealth — particularly for the next generation. A term life insurance policy doesn’t accumulate cash value like a whole life policy does, but it can still provide a significant, tax-free payout that helps your family build long-term financial stability after your death. That’s why many financial planners see life insurance as part of a broader generational wealth strategy.
For those interested in benefits while they’re still living, certain permanent policies — such as whole life insurance — do build cash value over time. Musson noted that some people use whole life insurance as a kind of “family bank” that they can borrow against in emergencies or tap into during retirement.
“While that’s an option worth exploring, whole life insurance is far more expensive than term life insurance, and it’s not a great investment compared to other investment options,” Musson explained.
Most experts agree that for young families focused on affordability and protection, term life is typically the best bet. But no matter which type you choose, the right policy can help ensure your family’s financial future and create a lasting legacy.
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
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This article originally appeared on GOBankingRates.com: 6 Reasons Parents Should Buy Life Insurance, Especially if They’re Young
