You may be thinking that on the birth of a child, most parents would be intent on taking out a life insurance policy. However, statistics show that this is indeed not the case.
A recent survey conducted by MetLife found that most consumer life insurance policies are taken out after a wedding rather than the birth of a child. The survey uncovered that 50 percent of working men and women who do not have dependent children and who are not married possess life insurance. For those who are married couples, 72 percent have life insurance, while for those married couples with young dependents, 75 percent have a life insurance coverage.
The question therefore has to be asked – why is it that more parents are not intent on taking out a life insurance policy? There are a number of potential obstacles to doing so, namely:
The fact remains that life insurance, or even insurance in general, is more for the ‘what-if’ times, that the vast majority of people don’t wish to consider.
There are of course other considerations to be made for parents. On their own death, they should ensure that their families are financially protected. The Agriculture Department estimated that the cost of raising a single child up to the age of 18 is estimated to be $234,900. Obviously, parents need to find a way to cover the cost of feeding, clothing, and educating their children, should they themselves be absent.
But even those parents who do have life insurance may very well be under-insured. MetLife discovered that the average workers’ life insurance will cover no more than three times the household income annually.
Financial experts traditionally recommend that individuals take out at the very least seven times their annual income. Nevertheless, each family’s needs does tend to vary. Therefore, a more accurate account might be to calculate how much is necessary to replace the main breadwinner’s income, or what would the costs be to cover such things as college tuition.
So, other than the consideration for diaper and kindergarten costs, parents who are looking forward to having their first or next child should add a further item to their to-do list: either taking out, or adding to a life insurance policy. Fact of the matter is that their kids may well depend on it one day.