We’re here to help you put together the pieces of the insurance puzzle, so you have more time to shop for the fun stuff.
One thing is certain: you need insurance. However, knowing how much and what kind can be tricky. We interviewed Life and Financial Specialist, Aaron Elkins, to get the scoop on the world of insurance.
What is the single most important type of coverage a parent needs to invest in when starting their family?
Just choosing one type of coverage is never the best solution. “The most important thing is to protect your new family. This means working hard to provide for them and being there to support and love your spouse and children. The most important coverage is one that will [continue to] do this if you are unable to—meaning investing in life and disability insurance to provide income, as well as health insurance to ensure your family won’t be forced to forgo treatment should an illness strike,” explains Aaron.
Instead of focusing all of your money in one area, work with your provider to spread your finances evenly over life, disability and medical insurance—even if you opt for the lowest rung in each category, having coverage in more areas will pay off.
Will my medical insurance need to change to accommodate our new family member?
As you probably already know, being pregnant means lots of trips to the doctor’s office—and don’t expect your visits to taper off post labor, either. Between your check-ups and baby’s weigh-ins and immunizations, you’ll probably get to know your receptionist on a first-name basis. Without insurance, these trips can seriously drain your bank account.
The important thing to remember is that just because you are covered by your insurance carrier, it doesn’t mean your new addition will be—you may have to change the type of plan you’re currently using. “Changes will depend on your coverage. Some companies automatically cover a new member when they leave the hospital while others cover them at birth.
“It’s best to call your medical provider when you learn you are expecting a baby and make any changes,” recommends Aaron. Most hospitals require all of your insurance information when you pre-register before birth, so if you haven’t talked with your employer or insurance agent about switching to family coverage, this will be a nice reminder.
When you have discussed all of your options with your carrier and settle on a certain type of coverage, make sure it is compatible with your chosen hospitals and doctors and be prepared to endure a waiting period before reaping the benefits.
Do I really need life insurance?
The honest answer is a resounding “yes!” Life insurance can be a big investment over the course of your lifetime; however, having financial backing for your family in the case of your death will be one of the best gifts you could ever give. “There is a misconception that life insurance will only make your family rich if you die. This is not true!” Aaron continues, “Life insurance is not designed to make you rich, it is to keep the ones you love from being poor. How much and what kind of life insurance will differ for each family, but the addition of a child means both mom and dad should have it. Even if one parent stays home and the other works, having a policy on both parents ensures the children will have options.” Life insurance means giving those you leave behind the option and financial ability to keep their home, afford taxes and funeral costs, keep up with bills and maintain the overall lifestyle you’ve always given them.
Depending on your financial situation, more or less coverage may be necessary. Look into both permanent life insurance and term life insurance—they vary in flexibility and cost. Don’t be scared of life insurance; many people are under the impression that it’s too expensive or inapplicable to their situation. Your insurance provider can quell your fears and help find a plan that’s a perfect fit for your family and your wallet.
What forms of coverage will I need now or in the near future, and how important are life, medical, disability and home insurance?
Clearly, insurance is an absolute necessity, but things start to get foggy when you begin picking and choosing between plans. However, there is a pecking order regarding coverage. “With the addition of a new baby, life insurance is the most important, followed by medical, disability and home insurance. Remember, a home can be rebuilt, but the financial impact of a lost or disabled family member can be devastating for life. It is important to protect the family first and then worry about belongings,” says Aaron.
As you gain monetary independence and become financially stable, it’s a good idea to think about home or renter’s insurance. After all, your belongings support your lifestyle and replacing them all in the event of a disaster without the help of insurance could be nearly impossible.
How will I be able to afford the coverage I need?
With all this talk about what to buy, and how much, the question of overall cost comes into the picture. Of course, being fully covered in every area of your life is always ideal, but it’s not always a possibility. The key is to be smart with your finances and pick your insurance coverage carefully. Your coverage will grow with your family and financial strength. Also, try to build your overall wealth—instead of sticking extra cash into your checking account, look into investment options that will earn interest on your money and give you more financial freedom.