New Baby on the Way? Here are the Changes You Should Make to Your Insurance Policy
Are you expecting a new baby? Congratulations! You'll soon be starting the job of a lifetime. You're probably more focused on furnishing their room than insurance, but a new family member means it's time for a new look at your life insurance and disability or critical illness policies.
Life Insurance Policy
At a minimum, contact your insurance company and tell them a new baby will join your family and you want to add them as a beneficiary to your policy. If you took your policy out several years ago or have a standard policy through your employer, think about the level of coverage your family needs now that you'll have a new family member.
The Canadian Life and Health Insurance Association publishes a guide to life insurance. It can help to explain different life insurance policies and assist in calculating how much life insurance you really need. A new family member means you'll probably need a higher level of coverage than you had before.
How can you determine how much life insurance you need? For income-earning parents, one option is to choose a level of life insurance that's between 5 and 10 times the annual income of the person being insured. Stay-at-home parents also need life insurance. It’s a myth that they don’t. They provide child care and many other services that the surviving parent may need to pay for. Other needs include coverage for your baby's future education, and factors like potential inflation and investment earnings. After you have a rough idea of your needs, you can start to compare policies and premiums.
Disability and Critical Illness Policies
You may not have insurance for either of these needs, but if you do, your baby should be added to the policy as a beneficiary. If you don't have disability or critical illness insurance coverage, consider how a sudden, serious illness or disabling accident could affect your family's finances. Critical illness insurance could preserve your savings. Disability insurance could help you restore lost income, preserve your family's lifestyle, or pay for alternative medicine.
Having a new baby is one of the most exciting times in a parent's life. Although late nights and multiple wakings can be exhausting, your baby's first smile will be a precious moment you'll never forget. Take a few moments to add your newest family member to your life insurance policy and review your coverage to make sure it's what you need.
One solution may be term life insurance. You can buy it for the term your child will live at home with you or provide coverage through their infancy into their young adult years until they are on their own and no longer reliant on you. Other options are available for other types of life insurance too. Don't neglect insurance coverage in case of disability or a critical illness. Enjoy your moments with your new baby and catch up on your sleep when you can!