Why You Need Life Insurance as a Parent

Caring for your child isn’t just a lifetime obligation — you also need to plan for costs that continue after you’re gone.

That’s why it’s so important to get life insurance as a parent.

Much like an emergency fund prepares you for unexpected expenses, life insurance protects your loved ones in case of your unexpected passing. 

Why Is Life Insurance Important?

Buying a life insurance policy protects those who rely on you financially.

Yes, some types of life insurance such as whole life insurance also function as a source of income, but at its core, life insurance is for your dependents. 

If you’re a parent, someone else needs your income to survive and thrive. Whether you’re a single or divorced parent or in a two-parent household, your kids’ well-being is your responsibility. 

A real-life example

This issue hits close to home for me because recently, a relative passed away at just 51 years of age. It was totally unexpected. Just as shocking: His family soon discovered that he’d canceled his life insurance policy a few years before. 

To be clear, this man was a loving father of two who never intended to leave his kids with a financial burden. These kids still have their mom and stepdad, but that doesn’t mean unlimited funds. 

Unfortunately, even though his children are college-aged, the lack of insurance means they have to deal with selling his assets to pay off debts (on top of figuring out how to finance the rest of their education).

This mess could have been avoided with an up-to-date life insurance policy.

READ MORE: How Does Life Insurance Work and Do You Really Need It?

6 Reasons Why Parents Should Get Life Insurance 

Here are some of the key reasons to insure yourself, at least until your children reach adulthood.

1. Cover living expenses for your children  

Whether your child is three months or 16 years old, you need to think of how they’ll manage if you’re gone. 

Life insurance means that if you die suddenly, the living expenses for your children will be covered. Death benefits help pay the monthly mortgage or rent, keep kids clothed and fed, and pay for childcare if needed. 

Whether it’s your spouse or another relative, your child’s caregiver will need money to handle basic expenses. You don’t want to add money troubles to what is already a sad and stressful time. 

Be sure to get coverage for both parents, because even if only one earns income, the other likely provides in other ways (like childcare).  

RELATED: When Should I Make a Will?

2. Pay off your debt

Not all of your debts will transfer to your loved ones (for instance, student loans are discharged upon death). But some debts do, and that can be a high price to pay. 

Even if the debt doesn’t technically transfer to your children, it might transfer to your surviving spouse — which affects your children. 

In some states, surviving spouses must use jointly owned property to pay off debt. Imagine your children’s other parent having to sell off the home they live in and uprooting the family just to handle debts you left behind. 

Life insurance benefits typically do not count as taxable income, so your surviving family members can use the death benefit proceeds to pay off debt rather than being burdened by it.

READ MORE: How Much Life Insurance Do I Need for My Family?

3. Cover funeral expenses

The cost of burial or cremation is an essential part of life insurance. It may be unpleasant to think about, but it’s one of those realities of life that someone will have to deal with when you’re gone. 

Buying life insurance ensures that the cost of either cremation or burial is covered. And it’s not a tiny amount: The National Funeral Directors Association (NFDA) reported that in 2023, the median funeral cost for viewing and cremation was $6,280. A viewing with burial totaled $8,300. 

Paying monthly premiums is a small price to pay for covering your funeral — so your kids and family can focus on grieving and remembering you with love. 

4. Cover educational expenses

While college isn’t a “must” in the same way that covering burial or the mortgage are, it’s worth including in your life insurance calculations. 

It definitely would have helped my relative’s kids if there had been some policy in place to not only take care of the necessities but also get them through their next semester or two of school. 

You don’t have to know exactly what your children will need in terms of schooling, but wouldn’t it feel better to have a plan to fund their higher education? That’s a gift you can provide them long after you’re gone. 

5. Cover estate taxes

You may be a parent who’s anticipating leaving a large estate behind. The tax bill for your beneficiaries is typically due nine months after your date of death.

Some people choose to get a permanent life insurance policy rather than a term one that ends after a certain number of years. This can help your heirs pay any estate taxes required after your death. 

READ MORE: Term vs. Permanent Life Insurance: Key Differences

6. Leave an inheritance

While an inheritance may not be as urgent as the points listed above, leaving a sum of money behind for your children can be a wonderful way to help pave the way for their future. 

You could help them put a down payment on their first home or launch their own business. Since death benefits aren’t usually taxable, life insurance can truly be a gift. 

READ MORE: What Is Generational Wealth and How Can You Build It, Too?

FAQs

Do I still need life insurance if my kids are older?

People often take out life insurance around the time their first child is born. A 20-year, 25-year, or 30-year term policy is often sufficient to get your child (or children) to adulthood. 

But even if your kids are older, it’s a good idea to get coverage for costs like the funeral, their education, and paying off debt.

How much life insurance should a parent have?

To calculate the death benefit amount to purchase, tally up the costs your family will need. Consider mortgage, other debt, your income, and kids’ education. 

For debt and mortgage, add their balance to the total, and for education, you can estimate additional amounts depending on how much coverage you can afford. 

For income, one tactic is to multiply your annual income by the number of years until your youngest child finishes high school. 

Stay-at-home parents shouldn’t skip insurance either. You need coverage equal to funeral costs plus the financial equivalent of your contributions, such as childcare and household work. 

TL;DR: Life Insurance for Parents

Parents, you absolutely need life insurance (barring uninsurability or lack of funds). 

It’s an act of love to provide financially for your kids in case of your passing (and you don’t know when that day will come). 

Getting life insurance ensures your family will be cared for. Not only will your funeral expenses and debts be covered, but so will ongoing household expenses for your kids and the person caring for them. 

If you’re not sure where to start, you can compare our picks for best life insurance companies, or you can use an online marketplace like Policygenius life insurance to compare plans.

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