Should You Increase Your Life Insurance Coverage Once You Have Kids?

It's definitely something to consider, given the cost of raising kids today.

Having kids changes a lot of things in your life. It means having to incur added costs, from healthcare to childcare, and it means having to balance your time so you're tending to your kids while also keeping up with work-related obligations.

There are a number of important financial moves you should make once you have kids. First, it's essential to rework your household budget to account for added expenses -- things like extra clothing, food, and even entertainment. You should also aim to pad your savings account so you're prepared for emergencies and unplanned expenses related to your kids, like medical bills. And you should definitely look into increasing your life insurance coverage if you bought a policy before having kids.

Does your coverage suffice?

The whole purpose of life insurance is to protect your loved ones financially. But let's say you bought life insurance when it was just you and a spouse. Just as it costs more money to raise kids than to simply live as a couple, so too will you probably need more money in the form of a life insurance benefit if you pass away and leave kids behind. 

You might also need to look at the length of your policy if you have term life insurance. Maybe you put a 10-year policy in place when it was just you and a spouse. You may want a long enough period of coverage to protect your kids through early adulthood. So increasing your coverage from a 10-year policy to a 20- or 30-year policy could make a lot of sense. And it could give you peace of mind as a parent.

An important expense not to overlook

When you're deep in the throes of raising children, the bills can really add up. In fact, in 2017, the U.S. Department of Agriculture projected that it would cost an average of $284,594 to raise a child through age 17. But then inflation came along. And now, because of generally higher living costs, the Brookings Institution has adjusted that figure to a whopping $310,605.

Having to spend money on life insurance -- or added coverage -- may not be the easiest thing given the expenses you're juggling. But it's an expense worth prioritizing nonetheless, especially given the cost of raising kids today. If you were to pass away and leave a surviving spouse to raise your kids on their own, that spouse might really struggle financially. 

Prioritize adding life insurance coverage

Many parents would stop at nothing to protect their kids financially. Buying life insurance is really the best way to do that. And so if it means increasing your existing coverage, and/or extending the length of it, that's something to focus on sooner rather than later. 

That said, it's always a good idea to shop around when buying life insurance -- whether for the first time or in the context of upping your coverage. At a time when you're also grappling with the cost of raising kids, every bit of savings could really help.