Expecting a baby is one of the most joyous experiences in life. As you prepare your nursery, don’t forget to talk to your insurance agent to make sure your coverage reflects the change in your growing family. Below are a few pointers.
Health insurance
Before your baby is even born, review your coverage and make sure you understand how your plan covers your new family member, as well as the mother’s needs during pregnancy. Think about prenatal vitamins, prenatal screenings and neo-natal tests, delivery of your baby, and pediatric care for your newborn. Notify your insurance carrier. Generally, health insurance carriers ask that a newborn be added to a policy within 30 days of birth. The birth of a baby is considered a life event, and you are allowed to enroll the baby at birth instead of waiting for open enrollment to begin.
If your family has multiple benefit options, compare health insurance choices to see which provides the best match for the needs of your family. Look at copays and coverages for both children and parents. Depending upon your specific plan, you may have access to health savings accounts or flexible spending accounts, which can provide valuable tax advantages.
Life insurance
As you plan for your revised life insurance needs, you must take the expenses of a new child into consideration, including housing, daycare costs, medical needs and education. Both spouses should be covered, even if one is a stay-at-home parent, and remember to keep your policy current. It is advisable to name a trustee to handle the policy benefits if your child or children are under 18 years old.
It is also important that you understand the types of life insurance available, and that you consider the plusses and minuses of whole life insurance as opposed to term life insurance or universal life insurance:
Whole life insurance
These policies build cash value and also pay a death benefit that has a more expensive cost. One option is to purchase a term life insurance with a conversion option to switch to a whole life policy for a fee when ready.
Term life insurance
These policies offer death benefit protection for a specific time, and term life premiums get larger as you age. Therefore, it is less expensive in younger years than whole life insurance, which covers you for your entire life and usually has stable premiums.
Universal life insurance
These policies include features of both term life insurance and whole life insurance. Typically, your premium payments cover the actual cost of the insurance, and the balance of the premium payment is invested to cover the increasing cost of insurance as you age. Universal life insurance tends to be more complicated than term or whole life, so work with us to understand the finer points.
Auto and homeowner’s insurance
Some families like to buy bigger vehicles such as SUVs or mini-vans upon the birth of a child, but this can affect premiums significantly. Check insurance rates before upgrading vehicles. If you plan on carpooling with other parents, you may wish to increase your liability insurance in case of a car accident that affects other children. If you build an addition onto your home, make sure to notify your homeowner’s insurer of major changes to prevent being underinsured.
Many parents overlook the changing insurance needs that arise from the installation of backyard items for kids, such as a jungle gym, swimming pool or trampoline. You might consider adding an umbrella policy, which will protect you if a person is injured while on your property. And don’t forget to document all of the new baby-related items in your home inventory. Keeping your home inventory up-to-date will protect from perils such as fire, theft or windstorm.
