Debt Free Article

Insurance Planning for Parents (Part 2)

Continued from...

This is the second section of our debt free article that helps parents plan their insurance coverage for the entire family properly.

Disabled Child

There is another issue than can affect your life insurance needs as a parent. This is the presence of a child with special needs. Depending on the nature of your child’s disability, he or she may be qualified fro government benefits from your state or from the federal Social Security Administration. Keep in mind, however, that these benefits may terminate if your life insurance policy’s death benefit creates an income stream to your child exceeding certain thresholds. If that seems likely, you should consider making the insurance benefit payable to your spouse or to a trust that you set up to take care of your child without disqualifying him or her from government benefits. In short, you have to consider insurance planning and estate planning to cover the situation.

Health Insurance

Obtaining the right amount of health insurance coverage for your family is as important as having enough life insurance. Your choices in this situation, however, are usually far more limited than they are for choosing life insurance policies. You will most likely get your health care coverage through your employer. From within the confines of that insurance plan, you will select the options that best suit your specific situation and coverage needs. Past that, you do not much maneuvering room. Individual health care policies are very expensive. Group policies through professional or trade associations are a possibility if you are self employed – but here too, you will have just a limited set of choices.

During the early years of parenthood, you may end up having to change up your health care coverage if one spouse quits a job to spend time with your children. That is, you may have to switch things up a bit with coverage if you lose one source of health insurance. This may simplify your situation – you now have fewer choices to consider – but it is not a reassuring kind of simplicity. You end up simply taking whatever coverage you can get.

Later years of parenthood may offer you slightly more options. As your children grow older, both you and your spouse may end up working outside the house. Two incomes will not necessarily increase your choices for health care coverage.

Disability and Property/casualty Insurance

Having children will change your needs for disability as well as property/casualty insurance. Property/casualty insurance includes homeowner’s and automobile coverage as well as liability insurance coverage. For the most part, the issues remain what they were before you had children. You need to:

• Guarantee both spouses’ ability to cover the family’s fixed and variable expenses in the event of disability.
• Safeguard your investment in your home.
• Protect your family against the possibility of litigation.
• Insure against injury and property damage from an accident.

Keep in mind, you may need to increase the level of coverage, and you may end up altering the kinds of coverage as well. Here are some specific suggestions that parents may find useful in dealing with insurance issues:

• Try to obtain the coverage you want from the company you want as soon as possible. Why you ask? Once your child or children reach their teens and begin to drive, you may find it more difficult to increase your coverage or change insurance carriers (cost effectively anyway).
• Personal injury protection (sometimes called medical payments) can be a useful addition to your property/casualty insurance coverage. Consider adding this endorsement to your homeowner’s and auto insurance policy coverage. This is important during the parenting years because it provides flexibility in protecting yourself if one of your children’s playmates ends up getting injured on your property or in your car. Carrying the maximum personal injury protection lets you pick up more of the other family’s medical expenses without hardship to yourself. In this day and age – this is important coverage.

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