I put off life insurance for the first eight months of Owen’s life. I had a whole list of reasons that, in hindsight, were just procrastination wearing a suit. The honest reason was that thinking about my own death felt like inviting it. Eventually I sat down for one boring Sunday afternoon, did the research, made the calls, and got it done. The whole thing took about three hours. I wish I’d done it during the third trimester when there was nothing else to do anyway.
This post is the version of that Sunday afternoon I would have wanted in front of me. Two big topics: life insurance and the three estate documents every parent should have. None of it is exciting. All of it matters more than 90% of what’s on most parenting blogs.
Part 1: Life insurance, in plain English
The vast majority of new parents need term life insurance. That’s it. The rest of this section is just elaborating on that sentence.
Term vs. whole life: the only thing you need to remember
| Term life | Whole life | |
|---|---|---|
| What it is | A pure death benefit for a fixed period (e.g. 20 or 30 years) | A death benefit + a savings/investment component, for life |
| Cost for $1M coverage, healthy 35yo | ~$30–50/month | ~$700–1,200/month |
| What happens if you outlive it | Coverage ends. You’re alive. Win. | You keep it. Cash value continues to grow. |
| Investment returns on the cash-value piece | N/A | Historically 2–4% after fees, vs. ~7% for an index fund |
Whole life insurance is sold aggressively because the commissions are huge. The math almost never works for a normal middle-income family. The standard advice from independent financial advisors (and Consumer Reports, and the Bogleheads forum, and basically everyone not selling whole life policies) is: buy term, invest the difference.
If you have a high-net-worth estate-planning need (multi-million dollar estates, special-needs dependents, business succession), there are narrow cases where permanent insurance makes sense. For 95% of new parents reading this, it doesn’t. Get term.
How much coverage to buy
The two common rules of thumb:
- 10x your annual income — fast and works for most.
- The DIME method: Debts (mortgage, loans) + Income replacement (annual income × years until kids are independent) + Mortgage payoff + Education costs.
For a 35-year-old earning $90K with a $400K mortgage, one kid, and a goal of covering 18 years of household expenses, the DIME number lands around $1.8M–$2.2M. The 10x rule says $900K. Buy somewhere in that range.
Two pieces of guidance I’d actually follow:
- It’s almost always cheaper to buy more coverage in one policy than to add a second policy later. Round up.
- Match the term to the time your kids will be dependent. A 30-year term bought when your child is born expires when they’re 30. A 20-year term saves a few dollars a month and expires when they’re 20 — too early.
What about insurance for the stay-at-home parent?
Yes. The stay-at-home parent’s economic value is real — childcare, household management, and education would cost $40–70K/year to replace. A $250–500K, 20-year term policy is appropriate and runs ~$15–25/month at age 35. Don’t skip this.
What about insurance through your employer?
Most employers provide 1–2x salary in group term life. Treat this as a supplement, not your primary policy. Two reasons: it’s tied to your job (so it disappears with a layoff), and the coverage amount is usually too low for a parent’s needs.
The buying process, end to end
- Get quotes from a broker, not a single carrier. Term4Sale, Policygenius, and Quotacy compare rates across 30+ carriers. The carrier with the best rate for a 35-year-old non-smoker isn’t the same as the one with the best rate for a 45-year-old with high blood pressure.
- Apply with the cheapest one whose underwriting you’ll qualify for. The application asks about height, weight, medical history, family history, smoking, dangerous hobbies.
- Take the medical exam. Free, in your home, takes 30 minutes. Blood draw and urine sample. Some “no-exam” policies exist but cost 30–50% more.
- Wait 4–8 weeks for underwriting. They’ll come back with a final rate. If it’s the rate you were quoted, accept. If it’s worse, ask the broker to shop other carriers.
- Sign and pay the first premium. Coverage starts.
Total time investment: ~3 hours of yours over the course of two months. Total cost: usually less than your monthly internet bill.
Part 2: The three estate documents you actually need
If you and your spouse die in the same accident tomorrow, who raises your child? If you can’t answer that question with a name and a notarized document, you have an estate-planning gap. The state will answer it for you, slowly, and possibly with someone you wouldn’t have picked.
The three documents every parent should have:
1. A will (with named guardians)
The single most important provision in a parent’s will is the guardianship designation — who raises the kids if you can’t. Without one, a probate judge decides, picking from family members who petition the court. Picking grandparents in their seventies for a six-month-old is a common default and isn’t always what you’d want.
Talk to your chosen guardian first. Make sure they say yes. Name a backup in case the first choice can’t serve.
2. A revocable living trust (often, not always)
If you have substantial assets (home equity, retirement accounts, life insurance proceeds), a revocable living trust accomplishes two things:
- Avoids probate. Probate is public, slow (6–18 months), and costs 3–7% of the estate in many states.
- Lets you control how and when minor children inherit. Without a trust, your kids inherit everything in a lump sum at age 18 (legal adulthood). Most parents don’t want a 19-year-old to receive a $1M life insurance payout. A trust lets you say “distribute in thirds at 25, 30, and 35” or “fund education and housing as needed, then distribute at 30.”
You can set up a trust through an online service (Trust & Will, FreeWill) for $200–500, or through an estate attorney for $1,500–3,500. Both are valid; the attorney is worth it once your estate gets complicated (multiple properties, business interests, blended families, special-needs beneficiaries).
3. Powers of attorney (financial + medical) and an advance directive
Less famous than the will, just as important. These cover the case where you’re incapacitated but not dead — coma, severe accident, late-stage illness:
- Financial POA: who can pay your bills, manage accounts, make financial decisions.
- Healthcare POA / proxy: who can make medical decisions for you.
- Advance directive (living will): your wishes about end-of-life care, so the person making the call doesn’t have to guess.
For new parents, the question is: who handles your finances and medical decisions if you’re in the hospital for three weeks? The answer should be a name on a piece of paper, not a hope.
The cheapest version of “doing it”
If money is tight and you’re paralyzed by the legal complexity, the bare minimum that’s still meaningfully better than nothing:
- Term life policy through Policygenius (15 minutes to start, ~3 hours total) — call this Day 1.
- Will + POAs through an online service like Trust & Will or FreeWill ($150–250, 1 evening) — call this Day 7.
- Update your beneficiaries on every retirement account, every life insurance policy, and your bank’s transfer-on-death designation. Beneficiary designations override your will. (1 hour) — Day 8.
That’s the sub-$500, two-week version of getting your estate in order. It’s not the optimal version. It’s the version that exists, which is infinitely better than the perfect version that doesn’t.
Owen will probably never need any of this paperwork to be invoked. The whole point is that it’s there, finalized, signed, in a folder he’ll find one day in our 70s when we hand it over because we’ve decided it’s time. That’s the version of this story I’m planning for. The other versions need a folder too.
Related reading: 529 Plans for New Parents covers college savings. Trump Accounts covers the new federal newborn savings program. Daycare vs. Nanny vs. Stay-at-Home covers the recurring childcare math.