Published April 21, 2017|5 min read
Can new parents use their baby shower to buy life insurance?Babies are expensive. Like, "$250,000 over 18 years" expensive.That’s why baby showers were invented, right? Sure, to celebrate the mother and the baby-to-be, but also so guests can give gifts to help the new parents provide for their little one.
But if you think about it, baby showers are sort of shortsighted. Yes, the parents get items they’re going to need, but it’s mostly stuff that’s immediately disposable (looking at you, diapers) or that the baby will outgrow in months, if not weeks.What about something else your baby needs, though? What about life insurance?Life insurance isn’t something that fits well in a box, but it’s the most important, longest-lasting gift a parent can get receive. So can new parents actually use their baby shower to secure a financial future for their child?
Okay, to figure out if life insurance is a feasible baby shower gift, we’ll need to do some back-of-napkin calculations on the value of baby showers.Obviously every baby shower will be different. New moms will have different numbers of guests, those guests will bring presents of varying costs, and the cost of the shower itself will differ. Keep that in mind as we crunch these numbers.First, how many people attend a baby shower? The average looks to be between 15 and 40; that accounts for friends, family, and coworkers.Then there’s the cost of gifts. This depends on the relationship to the couple: families are more likely to give a higher-cost gift than, say, neighbors or coworkers. Fifty dollars is the most often-cited cost, with some sources pegging it higher (or lower). For the purposes of a ballpark number, we’ll say new parents can expect a gift between $25 and $100 dollars per guest.That puts our potential total gift value at anywhere from $375 to $4,000 – a pretty big range, but it accounts for most scenarios.Finally, we come to the cost of throwing the shower. This can similarly vary wildly; some showers can be at a venue, complete with catering, while others might be at the home of a friend or family member.In any case, we can at least count on food, refreshments, and decorations. We’ll peg the cost somewhere between $100 and $1,000 dollars. If the shower is heavily DIYed, it’ll cost less, and some people cite costs going well into four figures.With the combined costs of a) the value of gifts people might otherwise give and b) the cost to actually have the shower, our final tally is between $475 and $5,000.How much life insurance does that actually buy?
Again, it’s important to note here that life insurance needs can vary based on an individual’s lifestyle, goals, and financial situation. Anyone shopping for life insurance should calculate their insurance need and buy a policy of appropriate death benefit and term.But we can easily estimate costs. A $500,000, 30-year term life insurance policy for a healthy 30-year-old female – someone we can easily imagine expecting her first child and holding a baby shower – starts at only $29 a month. That’s $348 a year.That means that with our low-end baby shower estimation of $475, you could pay for 16 months worth of life insurance. If you get the full $5,000? You’d get over 14 years’ worth of life insurance coverage. You’re almost getting halfway through your policy term, all on other people’s dimes!And that’s assuming you don’t lower the cost of your policy. How?
Don’t apply when you’re pregnant. This one is for the moms-to-be, obviously. Bodies go through changes during pregnancy, including gestational diabetes and weight gain. Since life insurance rates are based largely on health, any changes – even potentially temporary ones – affect rates. That’s why it’s recommended that expecting mothers apply for life insurance in the first trimester, or wait a few months until after delivery. (Or, of course, use your baby shower gains for life insurance for the father, if he’s the primary breadwinner.)
Use the ladder strategy. Instead of buying one big policy, you can layer multiple smaller policies that expire at different times so you don’t find yourself overinsured decades down the line when you don’t have as many debts or dependents you need to look out for.
Buy a policy of lower term and/or coverage. You need to make sure your life insurance policy will cover all of your necessary costs and debts, but maybe you just don’t need that much coverage. You might have your debts under control, or you’re well on your way to being self-insured. If that’s the case, you can buy a smaller policy that doesn’t cost as much, and you’ll make your dollars go that much further.
This is great, right! Get other people to pay for your life insurance! Perfect!Well, maybe not. You might run into a few problems as you’re enacting your master plan.First, baby showers are basically a parenting starter kits. Sure, you might get things that are more nice-to-have than need-to-have, but a lot of the gifts will be useful. If you don’t get necessities as baby shower presents, they still need to come from somewhere. You might end up footing the bill yourself. Still, people tend to spend a little extra on gifts, and you can probably buy more with $70 than four books and two toys.Second...well, this isn’t really a thing. No one asks for their baby shower guests to pay for their life insurance. Honeymoon funding has become popular in recent years, and you may be able to get some traction with a GoFundMe campaign, but an invitation asking for money to contribute to your monthly life insurance premiums will probably be a shock to people. They might kindly disregard your request and buy your child a stuffed giraffe anyway.Finally, people are weird when it comes to giving money. Take maternity leave, for example. It’s another important financial consideration for new parents, especially in America where family leave is often lacking to say the least. Some parents have decided to crowdfund their leave so they can spend time with their newborns when their workplace benefits don’t cover their needs.
Turns out people really, really don’t like this. Check out this forum. Some highlights?
"I'm not a fan of the idea."
"Asking for money in almost any situation is really tacky."
"There's no PC way to ask for this, imo."
"It would get a major side-eye."
"yaaaaa... this wont end well lol I have NEVER heard of such a thing and I could never do it myself, personally."
Needless to say, asking for money might not fly, depending on the circles you run in.So is there an elegant way to ask for money? Maybe if you noted all of the ways that life insurance protects your family, by providing a tax-free lump sum of money to pay for everything from a mortgage to retirement. Maybe if you said that you’d love your new child enough that you care about the ability to send him or her to college no matter what. Or maybe just say that the peace of mind this financial safety net will provide will let you enjoy your time with your little one that much more over the years.A life insurance policy might not be a baby shower gift that plays well on Pinterest or Instagram, but it’s the best thing a new family can get.
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