By Amy Massaro.
The reasons to purchase life insurance can vary depending on the stage of life you’re in. But no matter your situation, life insurance can provide a safety net that supports your family’s well-being and helps maintain their standard of living, even if you or your spouse* are no longer able to provide financially.
While some people are motivated to buy life insurance because they’ve just walked down the aisle, others obtain coverage when they purchase their first home. The birth of a child, however, tends to be one of the top reasons for purchasing coverage because this milestone brings so many new and dynamic financial obligations. According to U.S. News & World Report (2025), the estimated cost for a middle-class family to raise a child from birth to age 18 increased from about $233,610 in 2015 to nearly $322,000 in 2025.
As a parent you’re responsible for helping ensure that your children are protected and provided for, no matter what the future holds. With that, income replacement and education are typically the two biggest financial needs parents should consider when they purchase life insurance.
Income Replacement
Parents should look at income replacement from two perspectives: 1. The amount you may need to replace a paycheck in the event a breadwinner dies, and 2. What would it cost to outsource the services provided by a parent who doesn’t work outside of the home.
Planning appropriately for scenario one is often straightforward – it’s about helping ensure the bills and other financial obligations that paycheck covered will continue to be covered. Scenario two, on the other hand, takes some research because it’s about anticipating additional expenses associated with the loss of someone who provided services for the family – like childcare and household management – that would cost money to outsource. For example, the average cost of childcare in the United States is almost $13,200 a year, according to Child Care Aware of America in a 2024 report. Life insurance can help pay for those necessary services, so don’t forget about the important role that spouse or domestic partner plays as you discuss coverage.
Future Education Costs
Data from the National Center for Education Statistics reveals that between 2000 and 2021, the average college tuition and fees increased by 69%. And according to the College Board’s Trends in College Pricing (2024), the total cost of an education at a four-year public college, including tuition, fees and room and board, averages about $119,600 for in-state students and about $196,300 for out-of-state students. So it’s little wonder why this expense is often top of mind when parents consider how much life insurance to purchase.
This rising price tag makes it necessary to consider having a college savings plan in place, and it’s also what can make life insurance planning so important. To help ensure you purchase an adequate amount of life insurance, you need to put thought into things like your child’s current age, whether they might attend a public or private institution, and more. After all, the amount of money you need to fund an education at a public university for today’s 2-year-old can be very different from what you might need to save for a 13-year-old who aspires to an Ivy League institution.
Next Steps
It’s not always easy to forecast what your family’s financial needs might be down the road, but there are online calculators available to help you determine how much life insurance you may need. They take into account factors like your children’s ages, existing investments and debt, state of residence, age and more to help you evaluate your coverage needs. A financial advisor can also help you understand both future financial needs as well as appropriate investment vehicles to help keep those funds safe until they may be needed.
Conclusion
Having children comes with a new level of financial responsibilities, including considering what might happen if you or your spouse or domestic partner were to die. There are so many tools and resources available today that can help you plan appropriately and evaluate the right amount of life insurance you may need.
This article is provided for general informational purposes only and is not intended to provide individualized advice.
Amy Massaro is a vice president with Aon, serving accounting professionals in the AICPA Member Insurance Programs. Through her more than 28-year career, she has gained an in-depth knowledge of the range of risks that CPAs and CPA firms encounter. Amy earned a Bachelor of Business Administration (B.B.A.), Marketing at Villanova University and a Master of Business Administration from LaSalle University.
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