Having Children Inspired 1 in 4 American Parents to Make This Important Move

Being a parent changes you -- there's really no question about it. Suddenly, you've gone from only having your own needs to think about to having to care for another human being.

A lot of people make financial changes after bringing kids into the world. Some cut their spending to boost their savings account balance. Others put better health insurance coverage in place. And in a recent Policygenius survey, 23% of parents say they purchased life insurance as a result of having children. If you have kids but you don't yet have life insurance, you may want to follow their lead.

Make sure your children are protected financially

Your children might be at an age where they depend on you for things like food and personal care. But it might take a really long time until your kids are old enough to fend for themselves financially. And so it's important to put life insurance in place so your kids are protected in the event that you pass away before they've entered the working world.

Also, to be clear, it's important to get life insurance when you have kids even if you don't work. A lot of parents stay home when their children are young and take a break from their careers. But even in that scenario, buying life insurance makes sense.

While you may not have a salary to replace, if you were to pass away, leaving your surviving spouse to care for your kids and earn a living, that could get burdensome (and in some cases, it's just not feasible to work and look after young kids at the same time). Buying life insurance could leave your spouse with enough money to pay for child care (and other household help) so they can continue to hold down a job.

How much life insurance do you need?

Calculating the amount of life insurance you need can be a little tricky, but a good rule of thumb is to try to replace about 10 times your income plus cover any outstanding debts you have. So if you earn $60,000 a year and you also owe $150,000 on your home, you may want to consider a life insurance policy worth $750,000.

If you don't work, you may want to calculate the cost of child care and other help your spouse might need in your absence. So if annual child care costs for your two kids amounts to $30,000 in your area, and you'd need full-time child care for at least three more years, that's $90,000 right there.

But you'd probably want to pad that number to account for inflation, and also to give your surviving spouse more financial breathing room, such as if they need to hire a housekeeper. So a $200,000 policy wouldn't be unreasonable.

As far as the length of your coverage goes, a good bet is to put term life insurance in place that lasts until your kids are old enough to hold down jobs. You could also get a whole life insurance policy for permanent coverage, but those could be prohibitively expensive.

If you're going to go with a term life insurance policy, assume your kids will be able to start working in their early 20s. So if they're now ages two and four, a 20-year term life policy should suffice.

Having children is a life-changing event. But make sure you're doing your best to protect your family financially by putting life insurance in place.