Newborn Life Insurance: Is It Worth Considering?

Do You Need Life Insurance for Your Newborn?

Whether it’s your first kid or your fifth, parenthood can be overwhelming (to say the least!). There are meals to cook, loads of laundry to do, and, yes, smelly diapers to dispose of — which is why we totally understand why life insurance may not be at the forefront of your thoughts. 

We also understand that the last thing you want to contemplate is something terrible happening to your baby, and that even thinking about getting life insurance for your newborn can feel like bad juju. That being said, spending a bit of time looking at your options now can ensure you have financial protection and security for your family in the event anything happens. 

Plus, it’s not all doom and gloom: One of the benefits of insuring a baby or young child is that you can lock in lower premiums for them from the get-go, which they can then carry with them through their entire life. So let’s look more at how to evaluate what type of policy might be the right fit for your family.

Types of Life Insurance Policies to Explore

When researching life insurance for newborns, you’ll encounter a few different policy types (and these are actually the same basic types of life insurance available to adults, too).  

• Term Life Insurance provides coverage for a specific period of time, commonly 10 or 20 years. It is often the most cost-effective option.
• Whole Life Insurance provides coverage for the whole of a life — which means it would extend into adulthood for your child. This option also has the benefit of accumulating a death benefit, which your child could tap into in the future. This type of policy also has tax advantages, which can be beneficial for parents with other debts or dependents. This is usually the best way to protect your child’s future, since it covers them into their adult life and also ensures future insurability.
• Universal Life Insurance is another form of permanent life insurance (as opposed to term). It provides flexibility in terms of premiums and it also guarantees rates of return. 
• Variable Universal Life Insurance combines the flexible premiums from universal life insurance with a range of investment options linked to market performance.

How to Choose the Best Policy for Your Newborn

Choosing the right life insurance policy for your newborn can feel overwhelming, but there are manageable ways to approach it. As with any insurance policy purchase, you'll want to start by determining your coverage needs and budget, and then you can shop around for quotes.  

Determine Coverage Needs

Here are a few questions you might want to ask in order to figure out your coverage needs:

• Purpose of the coverage: Are you buying life insurance to cover final expenses, or is it meant to provide a financial cushion? This will help you land on the right amount of coverage.
• Length of coverage needed: Do you want to cover your child for 10 or 20 years (a term life policy) or for their whole life? That decision will impact what type of policy you get.
• Your budget: What can you actually afford to spend on a policy?

Review Each Option

Like California rolls and cups of coffee, not all life insurance companies are created equal. Underwriting requirements, costs, and extras all vary from provider to provider. You’ll want to compare the benefits and prices of at least three different plans before selecting the winner. Factors to consider include premiums, death benefits, cash value, and riders (optional add-ons).

We also recommend looking into the financial health of each insurance company by reading reviews, talking with friends or family, and visiting a financial rating website. You want to feel good about the company you’re going with.

Once you’ve found a policy that meets your needs, make sure you read through all details before signing anything, paying close attention to any exclusions. You want to make sure you understand exactly what is and isn’t covered!

Make Sure Everyone is Covered

Think of insurance like a safety net. And it’s a lot easier to be caught in a net than to land on a tightrope! So while getting insurance for your newborn is important, it means less if they’re the only one in the family that’s covered. Ideally, everyone in the household — parents and children — should have some sort of life insurance. 

Depending on your needs and constraints, you could add a child rider to your own life insurance policy instead of purchasing separate coverage outright. This is a relatively inexpensive solution, but it’s also only temporary: children can only be covered until they reach a certain age, and that threshold depends on the provider.

Monitor Your Policy

Like other types of insurance, life insurance isn’t a one-and-done endeavor. As your child grows and their needs change, you may want to adjust the coverage. This may mean removing the child rider and establishing policies for each child, adding more coverage, or changing to another life insurance company altogether. Your insurance agent can help you monitor your policy, make changes, and answer questions as they arise.

Keep Your Newborn Protected with Marble

If you’re too exhausted from all the sleepless nights right now, don’t worry! Life insurance is not a “now or never” type of purchase. But once you’re ready to find the life insurance policies that work for you and your family, there’s Marble, which makes it easy to compare quotes from multiple providers. 

Plus, you can keep your quotes and policies organized in the Marble app, which is so easy to use you could do it in your sleep (if you finally manage to get a little!). Sign up today and start earning rewards just for having insurance.