BABY ON BOARD CHANGES INSURANCE
New Parents Need To Get Smart on Coverage
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 following are 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
- 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
- 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 needs.
- 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
- If you have questions,
contact the Arkansas Insurance Department Consumer Services Division
at (800) 852-5494 or (501) 371-2640.
- Additional 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 — is located on
the NAIC Web site, www.InsureUonline.org.