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Fostered  Life Insurance

How an IUL Can Protect Your Child’s Future

  • Writer: Creative Director
    Creative Director
  • Sep 1
  • 3 min read

Updated: Sep 4

New Baby, New Bills:
The real problem new parents face

Kids are amazing—and expensive. A respected estimate puts the cost of raising a child (not counting college) at around $310,000 for a middle-income family. That’s housing, food, clothes, health care, daycare, activities—the works. If one parent dies, those bills don’t stop.

First, what is an IUL in plain English?
An Indexed Universal Life (IUL) policy is life insurance that:

  • Pays a cash benefit to the people you name if you die.

  • Can last your whole life if you keep it funded.

  • Has a cash value side that can grow based on a market index (like the S&P 500), with limits and rules set by the insurer. In short: protection first, with a savings component that can grow over time.

Why this matters for parents of newborns?

Portrait of a young father in a blue knit sweater gently cradling a sleeping newborn wrapped in a blue blanket. IUL Protected.
Portrait of a young father in a blue knit sweater gently cradling a sleeping newborn wrapped in a blue blanket. IUL Protected.
1) Day-one money for the people who need it

When you name beneficiaries, life insurance is designed to pay them directly—generally outside probate—so your family isn’t waiting on the courts to get help paying the mortgage, daycare, or diapers.

2) Typically income-tax-free for your family

In most cases, the life insurance death benefit isn’t taxed as income to your beneficiaries. That means more of the payout lands in your child’s life, not in taxes. (Estate or other taxes can still apply in some situations—ask a tax pro.)

3) A paycheck stand-in if the worst happens

Think of the death benefit like replacing years of your income so the surviving parent can cover the basics: housing, food, child care, health insurance. Employer health plans are pricey to replace if you lose them—average family premiums are high—so having a pool of cash ready matters.

4) Flexibility as life changes

“I can pay more some months and less in others?” With IUL, premium payments are flexible (within policy rules). That’s helpful when baby expenses spike or one parent steps back from work for a while.

5) A place for long-term money to grow

The policy’s cash value can earn interest based on an index (again, within caps/floors and policy charges). You’re not directly investing in the stock market, but the crediting method lets cash value grow over time, which some parents later use (carefully) for big needs.

How much coverage should new parents consider?

Start with “If I didn’t come home, what bills would my partner face tomorrow—and for how many years?”

Add: mortgage or rent, daycare/childcare, groceries, health insurance, transportation, and a cushion for the unexpected.

A quick setup checklist (keep it simple)

  1. Pick the right face amount. Enough to cover the big bills for a number of years.

  2. Name beneficiaries (and backups). Review after major life events (new baby, move, new job).

  3. Keep it funded. Use the flexibility, but don’t starve the policy.

  4. Annual check-up. Ask your agent to review costs, caps/floors, and performance each year so there are no surprises.

The bottom line for sleep-deprived parents

You don’t buy an IUL because it’s fancy. You buy it because it puts a tax-advantaged, direct-to-your-family payout behind your baby’s life, and it can adapt as your budget changes. With a newborn in the house, that kind of simple, reliable back-up can be the difference between panic and a plan.

Get a free, no-obligation IUL Quote

We’re an independent brokerage. We compare top A-rated life insurers—so you don’t have to. One application. Side-by-side options. We’ll size an IUL to your target number (including the “hidden” costs above) and help you choose the best fit.



 
 
 

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