How Long Do You Want Life Insurance With Kids? When you have children, life insurance is more than just a financial product. It can be a way to protect your family’s financial future if you are unexpectedly affected. One of the most common questions asked by parents is: How long do you need life insurance with kids?
The answer depends on the ages of your children, your income, debts, savings, education plans, and how much financial support your family would need if you were no longer there to provide it.
Many parents don’t want to keep life insurance forever. Instead, they opt for coverage for the years when their children are most reliant on them financially.
Why Parents Think About Life Insurance
There are many long-term costs associated with raising kids. Housing, food, education, healthcare, childcare, transportation, and the cost of everyday living can go on for many years. Unexpected loss of a parent can leave a family with these costs while also dealing with the loss of income. A life insurance policy can pay a death benefit to the beneficiaries, which can help to replace some of that lost income.
Parents can use the life insurance proceeds to cover expenses such as:
- Mortgage or rental payments
- Education of children
- Cost of child care
- Household daily costs
- Due debts
- Financial needs Immediate
- Goals for future family
The general idea is to create a financial “cushion” for the years when your family is most dependent on your income.
How Long Should You Keep Life Insurance with Kids?
There is no one policy length that fits all families. One useful way to think about the question is how long your kids are likely to be financially dependent on you;For some, the goal is to cover the youngest child until they are an adult. Others want to be covered until their children graduate from college or are financially independent. For example, if you have a 5-year-old child and want coverage until they are 25, you might want to consider coverage for about 20 years. If your kids are teenagers, you may need a shorter time.
The trick is to match the policy term to your family’s financial responsibilities, not to pick a term because it’s popular.
Consider Your Youngest Child
A good practical starting point is the age of your youngest child. A child normally needs support for many years, and the younger the child, the longer the period of dependency that still lies ahead.
Suppose you have three children, 4, 9 and 14. The youngest child may need financial support for much longer than the oldest. In such a case, a parent may want to consider how many years it takes to fund the major dependency years of the youngest child. That doesn’t mean all parents need coverage until their youngest child is 18 or 25 years old. You should also think about your own financial situation.
Think about the price of education
Another reason parents may opt for a longer term of life insurance is education. Or maybe you want to help pay for college, university, vocational training, or some other form of higher education. In that case, you may want coverage that continues past your child’s 18th birthday. For example, parents with young children may want a policy that is in force during the period in which their children are likely to go to higher education.
But education plans can change. A child can get scholarships, choose a cheaper program, work and study, or choose a different career path. These costs should be considered in conjunction with savings and other financial resources.
Your Mortgage and Other Debts Count
Your kids aren’t the only reason you need to decide how long you need life insurance. Think about your mortgage, personal loans, business obligations, and other big debts. If your family would struggle to maintain the home without your income, then more coverage might be a good idea. In contrast, if you have a specific number of years in mind for paying off your mortgage, your insurance needs can change as that debt shrinks. The length of a policy should be decided by parents depending on family dependency and financial responsibilities.
What About Term Life?
A term life insurance policy will last a specified number of years—10, 20, or 30 years—depending on the policy and the insurance company. This type of coverage is often thought about by parents as it can help provide protection at certain points in family life. For example, a parent with young children might choose a term that runs until the children are expected to be financially independent. The advantage of thinking in terms of a period is that you can tie the insurance to a certain financial goal. Exact cost and coverage available are determined by age, health, policy amount, policy features, and insurer requirements.
Do you need life insurance until your kids are 18 years old?
Not really.
Just because a child is 18 doesn’t mean they’re financially independent. Many young adults remain on their parents’ payroll while they go through college, get vocational training, or begin their careers. Some parents, therefore, choose coverage that extends beyond age 18. Instead of just thinking about a child’s birthday, consider the point at which your family could reasonably manage financially without your income. That point will vary from house to house.
What If You Have Small Children?
Parents of babies, toddlers and young children often face a longer period of financial responsibility. Thus, a longer term policy may be appropriate when the children are very young. For example, parents with a newborn may want to review whether a 20- or 30-year term is consistent with their financial objectives. This could potentially provide protection through childhood, teenage years, and early adulthood. But the right amount of time depends on the parent’s circumstances, not just the child’s age.
What If Your Kids Are Teenagers?
The needs of parents of teenagers may be different. Some families may find that a shorter policy term will be sufficient if their children are already nearing financial independence. But if you plan to be a financial resource for college or other extended periods, you may want coverage for more years. Look at your financial obligations to help you make a decision about whether your present policy still fits your needs.
Review Your Coverage as Your Family Grows. Life insurance needs can vary widely over time. You may have another child, buy a house, change jobs, increase your income, pay off debt, or build substantial savings. For these reasons, parents need to periodically review their insurance needs. A policy purchased when your children were babies might look very different from what you need when they are teenagers.
What coverage does a family need?
You’ll make two decisions: how long you want your policy to last and how much coverage you want.
A good place to start is to consider:
- Your yearly income
- Your household costs
- Your debts outstanding
- Future costs of education
- Childcare needs
- Current savings and investment
- Other insurance benefits
- Income of your spouse/partner
- Age of children
- Your long-term financial objectives
Consider the real financial needs your family would have instead of just applying an income multiplier.
Can you get life insurance when your kids are grown?
Yes. Some people continue to have life insurance after their children have grown up and no longer depend on them. There also may be other reasons to maintain coverage, such as providing for a spouse, covering final expenses, protecting a business, or leaving an inheritance. So, no, financial independence does not mean that life insurance is not useful anymore.
Final Words
So how long do you want kids’ life insurance for? The most useful answer to this question for many parents is to identify the length of time their children and household would be dependent on their income.
You might consider coverage until your youngest child reaches adulthood, graduates from school, or is financially independent. You should also consider mortgages, debts, savings, education plans, and your spouse or partner’s financial situation. Not every parent needs the same policy length. The right time depends on your family’s particular financial needs and goals.