BABY ON BOARD CHANGES INSURANCE NEEDS:
New Parents Need To Get Smart on Coverage Options
A new baby touches every facet of a family’s life,
including their finances. According to the National Center for Health
Statistics, more babies are born in August than in any other month. The
National Association of Insurance Commissioners (NAIC) suggests these
steps to help new parents protect their growing family.
- Understand your coverage before the baby arrives.
Review coverage options and find out exactly how your health care plan
handles the costs of a new baby. Remember to consider prenatal vitamins,
prenatal and neo-natal screenings and tests, emergency procedures,
delivery (C-section and traditional) and pediatric care.
- Notify your insurer of your new baby. Make sure you
are aware of the deadline and requirements to register your newborn with
your health insurance company. Similarly, if you are adopting a child,
consult your employer and health insurance provider for the requirements
to obtain health insurance coverage in advance. For more information,
check with your state insurance department at www.naic.org/state_web_map.htm.
- Evaluate your options. If both parents have
employee benefit options, compare the health insurance policies to see
which one best fits the needs of your family. Review the co-pay amounts
and different options carefully to see exactly what is covered – and
what isn’t – for both parents and children. Most companies will allow
you to make enrollment changes when a baby is added to the family. Check
with the benefits administrator at your office about your options.
- Make use of tax advantages. Ask if your employer
offers a flexible spending account or health savings account (HSA).
These plans allow you to set aside pre-tax dollars for medical expenses
and child care.
- Plan the contributions of both spouses. Consider
covering both spouses with life insurance, even if one is not employed
outside the home. In the event of the stay-at-home parent’s death, the
insurance policy can help the surviving spouse with the financial
necessities of the household.
- Account for child care costs. In determining the
amount of life insurance to purchase, take into account your full child
care costs (housing, education, child care, medical needs, etc.),
especially for children under five years old or for kids with special
- Understand the types of life insurance.
Understanding your life insurance choices will help you weigh the costs
and benefits of whole life versus term life insurance as part of your
overall financial plan.
- Whole life insurance. Whole life insurance
policies build cash value and pay a death benefit, but are more
expensive. If you can’t afford whole life insurance right now but
think you may want it in the future, consider term life insurance with
a conversion option that will let you change to a whole life policy
for a fee when you are ready.
- Term life insurance. Term life insurance offers
death benefit protection for a specified time period. For example,
term life insurance may be appropriate during your child-rearing years
or while paying off a mortgage. Term life premiums increase as you
age. Term life is typically less expensive in your younger years than
permanent life insurance, which covers you for your entire life and
typically has level premiums.
- Keep your policy current. Remember to update your
policy to include your children as beneficiaries. If your children are
under the age of 18, name a trustee who would administer the benefit of
the policy until they are adults.
- Check rates before upgrading vehicles. Auto
insurance premiums are linked to vehicle age and type, so if you decide
to get a larger vehicle, like a mini-van or SUV, to transport your
family, it could affect your premiums.
- Plan for carpools. Consider increasing your
liability insurance in case of an accident when transporting other kids.
- Notify your insurer of major additions. Alert your
insurance company when making any major home improvements (usually
anything over $5,000) to prevent being underinsured.
- Protect the backyard. Inform your insurance company
if you install backyard items for kids, such as a swing set, trampoline
or swimming pool. You might consider increasing your liability coverage
– that protects you in the event that someone is injured while on your
property – with an umbrella policy.
If you have questions or are confused about your insurance coverage,
contact your state insurance department. Visit www.NAIC.org to find contact information
for your state insurance department.
Get smart about your insurance needs! For more information about auto,
home, life and health insurance options - as well as tips for choosing the
coverage that is right for you and your family - visit www.InsureUonline.org.