3 Insurance Considerations for Growing Families

Review these considerations for health, life and disability insurance when preparing to welcome another person into your family.

couple-and-baby.jpgHaving and raising a child is a life-changing, rewarding experience. While it is undoubtedly an exciting time, it can also be one filled with nerves of the change to come. From a financial standpoint, welcoming another person into your family will invite some changes that you’ll want to consider both before your child arrives and periodically after.

One of these changes includes your insurance coverage. Parents are instinctively protective of their children; ensuring that your growing family has adequate protection in the form of insurance coverage is crucial. Of course, insurance coverage is by no means exclusively for parents or soon-to-be parents and their families. However, for those who either lack certain coverage or have not reviewed their policies in a while, starting or growing your family is the perfect motivator to get everything up to date.

Health insurance

Most would agree that health insurance is a necessity, especially for growing families. For those expecting, health insurance is crucial throughout both pregnancy and parental leave. More frequent visits to your doctor can be expected during this time, both for regular check ups during pregnancy and after the birth to ensure your newborn is growing and maturing properly.

Whether you are having or adopting a child, be prepared to have your child insured immediately. If you receive your health insurance through your employer, check with the plan administrator well in advance to learn of any critical details regarding how to add your child to your policy and other related information. You will almost certainly need to register your child with your health insurance provider within 30 days from the date of birth or adoption. Budget-wise, prepare for potentially higher premiums on your policy and for likely more health-related expenses that come with adding more people into the mix.

Life insurance

Many obtain basic life insurance coverage through their employer and then check that off their financial to-do list. However, having a life insurance policy through work is likely not enough—especially when you approach major life events, including getting married, purchasing a home, starting/growing a family and so on. The purpose of life insurance is to act as a vehicle to provide financial protection to your loved ones in the event of your untimely death. While it’s a topic that no one particularly wants to think about, especially if you are in the exciting process of preparing to welcome a child, it’s certainly a topic that needs to be considered.

The death benefits coverage your beneficiaries could receive from your life insurance policy could help finance critical expenses, including funeral costs, rent or mortgage payments, outstanding debt from credit cards or student loans, education costs, and so on. Funeral costs alone can be a daunting expense. According to the National Funeral Directors Association, the average cost of a funeral in 2017 with viewing and burial was $8,755.1 While life insurance certainly cannot replace you, it can provide your family with some financial help during a tragic time.

Life insurance is perceived as being too expensive. In fact, 63% of those who do not own life insurance have delayed purchase because of the cost.2 However, purchasing a policy when you are young and healthy has the potential to save you money in the long run. Furthermore, there is no one-size-fits-all policy. If you are concerned about the cost but also want to ensure your needs are being met, talk to a financial advisor about affordable options that still provide the coverage you need.

Disability insurance

You’ve likely heard the scary statistics of how much it costs to raise a child in today’s world. A middle-income, married-couple family will spend on average $233,610 for a child born in 2015 through age 17.3 This amount can vary based on multiple factors (location, size of family, etc.) and it could rise significantly if you choose to also pay for your child’s college education. As parents, you likely rely on a budget to plan for everything from weekly grocery costs to recurring bills to saving for future expenses like college or retirement. That budget more than likely includes the regular income of you and/or your partner, which is where disability insurance comes in. Have you thought about how you would continue to pay for your regular expenses and support your family in the event of a disabling injury or illness?

1-in-5 Americans today lives with a disability.4 Disabilities could include anything from becoming injured or disabled in an accident to becoming ill to the point where you are unable to work for an extended period of time. Disability insurance is synonymous with income protection. It safeguards your ability to still make a living even if you can no longer work. With a family depending on you, disability insurance can provide some much-needed peace of mind.

“When it’s just you, it’s a little easier to adjust your lifestyle to a reduced income if absolutely necessary. But when there are others that now rely on your income and it becomes increasingly difficult to adjust the family’s life during a period of disability, the need for COMPLETE income protection is much higher…and unfortunately most employer-provided plans simply don’t provide enough.”
- Chase Brakke, DIA, DIF, National Disability Insurance Consultant

As with life insurance, the cost of a disability insurance policy is dependent upon multiple factors, including your profession, age, income, and so on. A financial advisor can help you find a policy within your budget that fits the needs of both you and your family.

Other considerations

Of course, these considerations are not all-inclusive of every insurance consideration you may require as a growing family. For example, homeowners will certainly want to review their homeowner’s policies, car owners their car insurance policies, and so on. In general, insurance policies should be reviewed on a regular basis that makes sense for you and your family to ensure that your needs are being met and everything is up to date.

Obtaining the right insurance coverage can be crucial to growing families, especially in the event that you do need to use a policy for its intended purpose. Don’t delay on these critical financial matters—if the unthinkable does happen, the last thing you’ll want to be worrying about is money.

Interested in discussing this topic further with a financial advisor? With offices in 23 states, there is likely a North Star financial advisor near you. Contact an advisor here.

Written by North Star Resource Group.

1“General Funeral Service Facts.” National Funeral Directors Association. Updated January 4, 2018.

2“2018 Insurance Barometer Study.” Life Happens and LIMRA. Published April 2018. 

3“Families Projected to Spend an Average of $233,610 Raising a Child Born in 2015.” U.S. Department of Agriculture, Press Release No. 0004.17. Updated March 8, 2017.

Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods.

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