Road of Life Events
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Becoming a Parent
Becoming a parent involves a complete change in lifestyle, namely a lack of sleep!
In addition to planning your new baby's future, you may need to make adjustments
in your insurance plan - in particular, your life, disability and health insurance.
A new child will bring you great joy, but with that joy your baby will add to your
financial responsibilities. Raising a child today is not cheap clothing, food, school
expenses and extracurricular activities all add up. If you or your spouse died it
would not only create emotional distress, but also financial hardship. If you do
not already have life insurance, then now is a good time to buy a policy. Should
you already have a life insurance policy, you will probably need to increase the
coverage. To evaluate you life insurance needs you will
want to consider a number of factors including:
For a better idea use, our life insurance
needs calculator to help you estimate how much life insurance you require.
- Final Expenses - These could be unpaid hospital bills, funeral expenses,
unpaid debts, probate costs, and estate and inheritance taxes.
- Readjustment Fund - This may be used to cushion the immediate lifestyle adjustment
that your family must make if you died. Your family may be forced to move, or your
spouse might have to look for a new job. In addition, if your spouse already works,
he or she may find it difficult to return to work immediately after your death.
The readjustment fund allows for adequate bereavement due to loss.
- Supplemental Income - After the readjustment period, there should be a consistent
income stream to help pay for your family's living expenses, such as mortgage payments,
monthly bills, and daycare.
- Educational Funds - Adequate funds should be available for your children's'
education. This might include elementary school, high school, and college.
- Retirement Fund -There should also be adequate funds available to ensure
that your spouse can retire comfortably.
There are two major types of life insurance, term and permanent life insurance.
Term insurance is the least expensive coverage you can obtain if
your life insurance needs are between 1 and 30 years. If you’ve just had a baby
then your life insurance needs will last for at least the next 20 to 25 years. A
level term policy with guaranteed premiums is a good option.
Permanent life insurance is more appropriate if your need for life insurance
is greater than 30 years.
For more information on life insurance see
Uses of life insurance,
Determining your needs,
Types of life insurance and Beneficiary
Disability insurance is one of the most important types of insurance because it
protects your most valuable asset, your future earnings ability. Over your life
you will earn hundreds of thousands of dollars unless you become disabled. When
you become a parent your financial responsibility increases greatly. Protecting
your spouse's and your income is extremely important. A good long-term disability
policy will provide you with a sufficient income stream in the case that you are
disabled. Check to see if you have adequate coverage through work, and if not, contact
an agent to obtain an individual policy.
Having a baby can be expensive considering that medical expenses for labor and delivery
alone are in the thousands of dollars. If you already have health insurance coverage
when your child is born, then your child may automatically be covered under you
health insurance plan for the first 30 days (check with your provider). After the
30 days expires, you need to add your child to either you or your spouse's health
insurance plan provided you already have existing coverage.
If your family has no health insurance, then now's the
time look for affordable coverage. First see if coverage is available through your
employer because group rates are often less expensive than buying an individual
policy. Also, if health insurance is available through your employer you may be
able to pay for your monthly premiums before tax if your employer has established
a cafeteria plan. Inquire with your human resources or personnel manager about your
Should health insurance coverage not be available through either spouse's employer
then seek your own coverage. If you are unable to afford private health insurance,
then you may be eligible for Medicaid which provides medical assistance to low-income
families. Medicaid is a government-sponsored benefit, and you can obtain more information
by contacting your local government. Should your income be too high to qualify for
Medicaid, then your child may be eligible for the Children’s Health Insurance Program
(CHIP). CHIP is free or low cost insurance provided by the government for children
whose parents cannot afford health insurance. Contact your state government for
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