Plan for money emergencies before bringing a child into your family

(BPT) – Whether welcoming a newborn, adopting a child or becoming a stepparent for the first time, bringing a child into your life means big changes – and a big impact on your finances.

According to the United States Department of Agriculture, parents of children born in 2013 will spend approximately $ 245,000 – per child – on housing, education, food, clothing, child care and other expenses until the age of 18. With that kind of monetary commitment looming, new parents need to childproof their finances against life’s unpredictable situations and consider the potentially costly insurance implications of each stage of their child’s life.

Securing finances against the unforeseen

Americans work hard to keep their children safe – from retrofitting a home for a new baby to teaching a teenager safe driving habits and everything in between. But despite best intentions, on average, parents spend an estimated $ 11.5 billion annually on injuries to children according to the Centers for Disease Control and Prevention (CDC).

“Throughout a child’s life, parents and guardians can face many unexpected financial hurdles related to injuries or illness,” says Adam Hamm, National Association of Insurance Commissioners (NAIC) president and North Dakota insurance commissioner. “Parents need to educate themselves about the risks, challenges and insurance implications of raising a child to reduce injuries, save money and potentially even save a life.”

Safety risks and unpredictable circumstances can arise in a variety of ways. Consider the following:

* Birth defects affect one in every 33 newborns according to CDC statistics. Babies who live with birth defects may face lifelong challenges, so it’s important to know if your health insurance covers pre-natal and neo-natal screenings, emergency delivery procedures and extended hospital stays.

* The Consumer Product Safety Commission reports that 44 percent of playground equipment injuries occur at home. Parents should double check their liability coverage to ensure it covers playmates who are hurt on their property.

* The CDC also reports that 46 percent of teens don’t wear seatbelts when riding with friends, significantly increasing their risk of injury or death in an auto accident. Something as seemingly simple as a teen driving contract can hold kids accountable – saving money and lives in the process.

Take action now

Understanding the insurance implications of a new child can be tricky. Get a jump on preparations by exploring the following:

* Determine if paid maternity leave is included in your health benefits. If you anticipate needing extra time off, a short-term disability policy might be helpful.

* Ask your employer about a flexible spending account that can be used to set aside pre-tax dollars to cover medical expenses and child care costs.

* Consider the impact on your auto insurance premiums if your expanding family compels you to purchase a larger vehicle. Shop rates and consider different models before you buy. Rates will vary depending on make, model, age of vehicle, etc.

* A new dependent means you should reassess your life insurance. Will your current level of insurance be enough to secure your child’s future if the unthinkable happens to you? Consult with your insurance agent or use an online calculator to determine if you need additional insurance.

* Adoptive parents, stepparents and custodial guardians should also check with their health insurers to determine a new child’s coverage eligibility. Life insurance policies, investment accounts and other financial accounts may need to be updated to reflect a new child as a beneficiary.

For more “first steps,” check out Get Ready resources for new parents at The resource kit includes tips, questions to consider and things to do to childproof your finances before a new bundle of joy joins your family.

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