There are many important questions to ask yourself when you’re starting a family:
- Is our car big and safe enough for children?
- Do we have ample room in the house for kids?
- Is our income large enough to support a growing family?
These are just a few of the many things to be considered. But what about insurance? Though it may not be at the top of your to-do list, it’s crucial that you select the right types and amounts of insurance to protect your family.
Here are five important policies you need to have when starting a family.
Health insurance for kids
You probably have health insurance, either through an employer or a policy you purchased individually. If you’re like many people, you may have enrolled in a high deductible health plan if you’re in good health and rarely see a doctor. This type of policy may have saved you a bundle on monthly premiums, but is it suitable for a family with kids?
Though the monthly premiums are higher than high deductible health plans, HMOs and PPOs are very popular with families that have kids. The reason: kids go to the doctor more frequently than young, healthy adults.
Immunizations, school physicals, cold and flu season, and accidents. These are good reasons to have a health insurance plan that covers doctor’s office visits and carries a reasonably low deductible for emergency room visits. HMOs and PPOs are worth investigating. But, no matter which type of policy you select, health insurance is a must-have.
Dental insurance for kids
According to Oral B, metal braces cost $3,000 to $7,000, ceramic braces are $4,000 to $8,000, and Invisalign costs $4,000 to $7,400. And prices for braces keep rising.
Dental insurance won’t pay all of the cost for braces for your kids, but it will pick up a good percentage of the cost. And as an adult, you could very well need extensive dental work, like a root canal, gum grafting surgery, crowns, or other extensive dental work.
There’s no need to watch your savings account dwindle when you have orthodontic or dental bills. Let your dental insurance pick up some of the costs; it will ease the pain you’re experiencing.
Life insurance for kids
Just about every financial advisor will tell you, as a young parent, that you must have life insurance. They probably won’t agree on the type of policy — term vs. whole life — but they’ll agree that you need to protect your family if you or your spouse die while your children are in school, or longer if you have a child with special needs.
They also will probably disagree on the face amount of the policies that you should have. One advisor may use a multiple of income as a rule-of-thumb, while another will do a complete fact-finder to meticulously arrive at a recommended amount.
Either way, what matters is that you have life insurance if you have kids. If you or your spouse pass away, you’ll want to be sure that:
- The kids can stay in their home and not have to move out
- Their education is funded
- Childcare expenses are provided for as long as the child needs it
- Their lifestyle won’t suffer because you’re no longer there
Factor life insurance into your budget. It will give you peace-of-mind knowing that your young family will be safe if the unthinkable were to occur.
Other types of insurance for parents
Critical illness insurance
You may be asking yourself, “Why would I need critical illness insurance if I have health insurance?” Great question.
If you’re like most growing families, your savings account balance isn’t anywhere near where you’d like it to be, and missing a paycheck would rapidly deplete it. That’s where critical illness insurance comes in.
Critical illness insurance will keep you from raiding your bank accounts when you have to pay deductibles, co-pays, and non-covered medical expenses when you or a family member experience these illnesses:
- Heart attack
- Coronary artery bypass surgery
- Angioplasty
- Stroke
- Invasive cancer
- Non-invasive cancer
- Kidney (renal) failure
- Major Organ Transplant
- Advanced Alzheimer’s disease
- Paralysis
- Coma
Critical illness insurance pays you cash directly — not your medical provider — when you have a covered illness. Not only will the money pay out-of-pocket expenses for you, but it will also provide you with funds to pay for child care as you recover. It’s essential coverage to have.
Disability insurance
Being younger and healthy may give you a feeling of security, but consider this: 1 in 4 of today’s 20 year-olds will become disabled before they retire. That’s a sobering statistic.
A good question to ask yourself when considering purchasing disability insurance is, “How long can I go without a paycheck before I can’t meet all of my monthly financial commitments?” If you’re like most Americans, the answer is “not very long.”
Disability insurance is essential because it keeps a paycheck coming to you when you aren’t able to work. It can make the difference between paying your bills or declaring bankruptcy. In fact, a CNBC finding showed that two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
Your health insurance policy will pay your doctor and the hospital, but will your employer continue to pay you if you can’t go to work? Most likely, not. Disability insurance will keep your lights on and food on the table — extremely important coverage to have.
[ Related read: What you need to know about long term disability insurance ]
The bottom line
These are five important policies to have when starting a family. You may not want to pay the premiums, and you may not want to make any changes to your lifestyle to afford these policies. But, any important financial goal will require planning and sacrifice to accomplish it.
These policies carry a monthly cost, but if you don’t have them in place when you need them, you’ll have a much larger cost to bear. Take care of your children while they’re young. Before you know it, they’ll be out of school and raising families of their own. Then, you’ll be able to enjoy a reduction in premiums.
Protecting your family is a great responsibility, but it’s also an honor and a privilege. Enjoy it.
Jack Wolstenholm is the head of content at Breeze.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.
