Thursday, 27 July 2017

What To Expect When You're Expecting is one of the most popular books for new parents-to-be. But for all its strengths, it wasn't written to address how to deal with the unexpected.

This is why new parents must take steps to ensure that they have all the appropriate insurance coverage as their family grows. Here's a breakdown on how your insurance needs may change with the arrival of your little one. 

Health insurance 

Your new addition will require his or her own health insurance policy coverage under your plan. Fortunately, giving birth is considered to be a qualifying life event which entitles parents to a Special Enrollment Period (SEP) under the Affordable Care Act—often referred to as Obamacare. The SEP allows parents to enroll their child within 60 days of being born, with coverage retroactive to the day your baby is born.

In addition, most employer-sponsored health care plans allow parents to retroactively add their existing children to their coverage within 30 days of birth. This way, parents can notify their current providers shortly after birth to obtain immediate coverage, and then later choose a different plan using the SEP within 60 days of birth. If parents learn that their newborn requires additional care, they are able to choose a plan that meets those needs.

 Fortunately, the coverage needs for a healthy baby will not differ much from adults. Plans that meet the terms of the Affordable Care Act must cover the entire cost of preventative care including well-baby visits, scheduled immunizations, and screenings for childhood diseases — all without requiring a copay. 

Life insurance

While newborns are completely dependent on their parents' care day and night, it's important for parents to realize that their children will likely be dependent on them financially until they reach adulthood. Therefore, it's wise for parents to consider a life insurance policy that can meet their family's needs should the unthinkable occur. 

According to Ron Naff, an insurance broker at Focused Money Advisors in Denver, two-parent households should consider purchasing life insurance for both parents, as the loss of either one would have significant financial repercussions.

For example, even if the surviving parent is the wage earner, he or she would still require significant additional resources to make up for any child care and housekeeping that had been contributed by a stay-at-home parent. And if both parents are working, living off of a single income would make it more difficult to save for college and retirement. Having adequate insurance can give the surviving spouse options to raise the children in the same ways as when both parents were living. 

Disability insurance

The possibility of a working-age person suffering a disabling event can range from minimal to highly likely depending on  variables such as general health, hobbies, and profession. But ultimately, most workers should prepare for the possibility of being temporarily unable to work sometime during their careers and consider disability insurance. Disability insurance coverage can provide a safety net for families in case one of the parents suffers an injury or debilitating illness.

As always, discuss coverage needs with a trusted and well-qualified financial adviser or insurance broker to determine what is best for your situation.

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