Adding a new baby to your health and life insurance policies can be a tricky job that takes homework on your part. Because there is no one-size-fits-all plan for every family, compare both your own and your spouse's employer-sponsored health insurance plans to see whose coverage offers the best benefits to keep your little one healthy. When it comes to buying life insurance, knowing the ins and outs of a policy can help you make better decisions for the sake of your loved ones.
Social Security Number
You need to get your baby a Social Security number in order to add him to your health plan, set up a trust account or name him as a beneficiary. To prevent delays, apply for a Social Security number for your newborn at the same time you apply for the birth certificate. If you wait until later to apply for a Social Security number for your baby, you need to show your child’s birth certificate and a document such as a hospital record proving your child’s identity. You also need to complete an application for a Social Security card, showing your driver’s license, U.S. passport or other proof of your own identity.
Under the laws of many states, both individual and group health plans must add newborn infants to the policy of insured members even if a child is born prematurely, has congenital defects or becomes ill at birth. Policy terms vary; some policies cover the child from the moment of birth, while the effective coverage date for other policies is the first day of the month in which your child is born. Contact your insurance carrier for details and to request the enrollment forms necessary to add your baby to your health insurance plan. Most insurers allow you a certain length of time when you can pay the premium and add your baby to your policy. Failing to make the change within the specified number of days could mean that you have to wait until the next open enrollment period to add your baby to your insurance.
After your baby is born, you may wonder whether you have enough life insurance to provide financially for your family if something unexpected happens to you or your spouse. Now that there is another person depending on your income, it may be necessary to increase the amount of your life insurance in order to adequately cover the basic financial necessities, child care and medical costs for a minor child while growing up. Usually, a term life insurance policy is cheaper to buy than whole life insurance and still provides a death benefit to your family if you die within the pre-defined term.
If you name your child as a life insurance beneficiary, she may not be able to access the money until she turns 18. In some states, the law requires the insurance company to hold the proceeds from life insurance until a child reaches the age of majority. Other states allow the insurance company to pay out death benefits to a guardian the court appoints. Rather than naming your child as beneficiary, you can name an adult you trust to use the money to provide for your child’s needs; most people designate a spouse, another relative or close friend. Another option is to name a trustee to manage the benefit on your child’s behalf. When you create a trust, include provisions in the trust documents that authorize the trustee to use the funds for your child according to your wishes.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.