Babies. They’re cute. They’re cuddly. They’re expensive.
New parents will spend an estimated $10,000 on the first year of their baby’s life, and that cost will only increase as the years go on. By the time he reaches age 18, you’ll likely have spent an estimated quarter of a million dollars raising your child.
Any loving parent will tell you that it’s worth it, and many financial savvy parents will tell you there are a few insurance options that can help soften the blow. Here are a few to consider.
Health insurance coverage. Even if you have health insurance, you’ll likely still pay some out-of-pocket costs for prenatal testing, routine check-ups, and hospital stays and delivery. Since each pregnancy is unique – and sometimes unpredictable -- you should check what your policy covers in the event of any unplanned tests, a C-section, or even extended hospital stays. Once baby arrives, make sure he’s covered under your plan too. Babies often visit the doctor once every three months for wellness checks and vaccinations. It may be worth upping your coverage plan and paying more to cover more costly doctor’s visits.
Life and disability insurance. Now that you’ll have someone who will wholly depend on you financially, it’s important to consider getting life insurance or adding them to your existing policy. Parents generally opt to buy term life insurance since it protects your child in case you die before they turn 18. But another option is called whole or permanent insurance. This type of policy remains until you actually pass away, regardless of your child’s age. Consult an insurance agent to see which option is appropriate for you.
Write or adjust your will. Life insurance may ensure your child is taken care of financially, but there are other important pieces to consider in the event that one or both parents die. Make sure your will contains information on who will inherit your assets (home, personal belongings, businesses, etc.) and designate a guardian who will continue to care for your child.
Car insurance. In some cases, having a baby may actually reduce the cost of your car insurance. For example, buying a larger car to accommodate the car seat and stroller may actually cause your insurance rate to go down, since insurance companies see larger cars as safer options. A car listed on the Institute of High Safety’s Top Safety Picks is more likely to qualify for a lower insurance premium. Another option to lower your monthly insurance payment is to choose a higher deductible, if you feel you’ll drive less often – or even safer – with a new baby.
Home or renters insurance. Baby-proofing your home can take on many forms, depending on the type of space you live. It can range from simple adjustments in furniture and flooring to building fences and home additions. For some who’ll need more space, it may mean moving out. Whatever decision you make on the property you rent or own, make sure your insurance company knows what you’re up to. The National Association of Insurance Commissioners recommends letting your insurance company know if you’re making any major home improvements that will cost over $5,000 to prevent being underinsured. Also, let your insurance company know if you install any backyard accessories for kids like a pool or swing set. They may recommend increasing your liability coverage with an umbrella policy to protect your family and any guests.