7 Insurance Changes to Make When You Have a Baby

If you just welcomed a child into your life, there are a million things to do. Updating your insurance policies probably isn’t at the top of the list, but, from health insurance to life insurance, you’ll need to make changes to keep pace with your new phase of life and ensure your family’s security for years to come.

Here are seven updates to make to your policies when you start a family.

“Your baby should automatically be covered for the first 30 days on your existing policy, but you need to officially add them during this period so that they are insured moving forward,” Regina McCann Hess, a certified financial planner at Forge Wealth Management, told CNBC Select.

If you have a partner who has their own health care, you can pick the one that best suits your needs and budget.

If you get coverage through the ACA Health Insurance Marketplace, you’ll need to buy additional coverage. If you have Medicaid, your baby is automatically enrolled for the first year.

There are many different life insurance plans on the market, but term life is a straightforward and affordable option for new parents. It’s only in force for a certain number of years, usually between 10 and 30, but it can serve as a safety net during your child’s most vulnerable years, when your income caregiving is most critical.

A $250,000 policy for a 30-year-old woman averages about $15 per month, according to Policygenius. For a 30-year-old man, it would be about $18 a month.

A whole life insurance policy, in comparison, would cost upwards of $200 per month.

One of our top picks for term life insurance is Ladder, because it allows you to increase or decrease your death benefit as your life changes. If you own a car or house, Amica has affordable premiums and a healthy discount of up to 30% on auto, home and umbrella policies when you add life insurance.

You might think you’re covered if you have group life insurance through your job. Employer-sponsored policies usually only pay out the equivalent of one year’s salary, however, and the rule of thumb is to have at least 10 times that amount.

Even if you did take out a policy on your own, it probably doesn’t reflect your current needs.

“Consider your current lifestyle, your child’s lifetime educational needs, and your spouse’s financial needs in case you aren’t around,” says McCann Hess.

If your existing policy has a guaranteed insurability rider, you should be able to increase coverage at life milestones, such as the birth of a child, without undergoing another medical exam.

No one wants to think about something terrible happening to their child, but a child’s life insurance policy can help cover medical expenses and funeral costs. It also ensures they’re eligible for coverage when they’re older, even if they develop a disqualifying health condition or take up a risky job or hobby.

Children’s whole life insurance policies also have a cash value component that grows over time. Later in life, if they keep the policy current, the cash value can be withdrawn, borrowed against or used to help pay premiums.

You can typically get a policy for a baby 14 days after birth, with the usual medical exam requirement waived. Our top picks for children’s life insurance include Aflac, one of the few companies with term life policies for children, and Foresters Financial, which has a Bright Future Children’s policy that pays out up to $75,000.

While life insurance may be top of mind, it’s more likely you’ll be disabled during your working years than pass away. According to the Social Security Administration, one in four U.S. workers in their 20s now will become disabled before they reach full retirement.

Disability insurance can help ensure you’ll have enough money to keep your household running if you’re unable to work for a period. Short-term disability provides income if you’re temporarily unable to work due to a covered illness, injury or medical condition. It can last up to six months and is often (but not always) provided by employers.

“Will it fully cover all of your lost income?” McCann Hess says. “No, but hopefully it will help you pay some of your household expenses and provide some financial stability while you are disabled.”

If you’re self-employed or don’t have coverage through work, a short-term disability policy from online marketplace Breeze can replace up to 60% of your weekly income for up to two years.

If you’ve made upgrades to your home in anticipation of your new arrival, it’s time to bump up your homeowners insurance‘s dwelling coverage.

And, if you purchased an SUV to shepherd your little one around, revisit your car insurance policy and see if you’re still getting the best deal. State Farm offers a multi-vehicle discount of up to 20% off.

Your life is expanding, so make sure your coverage does too. Liability protection pays out if you or someone in your household unintentionally causes damage to someone or their property. An umbrella insurance policy supersedes the limits on your home and auto policies, providing an extra layer of protection.

Travelers offers affordable umbrella insurance policies worth up to $5 million that can also cover attorneys’ fees, medical bills and other expenses.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Certified Financial Planner Regina McCann Hess of Forge Wealth Management in Malvern, Pennsylvania.

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