New parent or parent to be? Here’s what you need to know to make sure they’re protected

If you’re a first-time parent, your whole life has changed and you’ve got a million things to think about – so it helps having peace of mind that your little bundles of joy are protected if something happens to you or them.

As new parents or parents to be, there are a few insurance considerations you may want to think about at this time.

Protecting your family and your income

Your growing family needs income if something happens to you or your partner, because you both play important roles in the family that would cost money to have someone else fulfil.

Make sure you and/or your partner consider life insurance that can cover your mortgage and expenses if something happened to either of you, plus income protection if one or both of you couldn’t work.

Primary carer not planning to work?

It’s important not to forget the cost of the primary carer if they weren’t around and ensure you or your partner (whomever is doing that role in full or part) is covered.

A nanny would need to be paid for, or the other partner would need to stop work to care for the child or children. Who would do the shopping, prepare meals, clean and drive to health care appointments or school? These are all expenses that are commonly overlooked, as well as lifestyle changes that the secondary carer would have to make, if the primary carer wasn’t around.

Taking parental leave?

If you’re planning on taking parental leave, here’s some practical information about what happens to your insurance cover when you’re away from work.

• Your life insurance cover (death, TPD and terminal illness) will remain in place, so long as you have enough money in the bank to pay your premiums.
• If you have income protection cover, you’ll need to check your cover, because the amount of time you’re on leave may impact your cover. For example, cover in super only continues if super payments are still being received from your employer.
• There can also be differences to your potential claims payment depending on whether you take paid or unpaid parental leave.
• You may wish to call a financial planner to make sure everything is in place, or your insurance or super provider.

Health Insurance

If you’re planning a baby you may wish to consider private health cover for a private obstetrician and birth. Making sure you have cover to pay for dentist appointments, ambulance fees, optical and other treatments such as speech therapy and physiotherapy for you and your kids, is important. Having health insurance makes sure some of these costs are covered, and if your income is above a certain level, it can help you avoid paying extra Medicare costs at tax time.

Calculate how much you might need

According to research release in April 2018 by The Australian Institute of Family Studies¹, the estimated weekly costs for low-paid families of raising two children – a 6 year-old girl and a 10 year-old boy – is $340 per week, or $170 a week per child. While at the lower unemployed standard, the weekly costs of raising two children is $280 per week, or $140 a week per child. These provide base level or “minimum standards” for costs associated with raising children.

The report showed that the most expensive budget items were housing costs, based on families paying average prices for rental accommodation in eastern metro cities, followed by food, household goods and services.

Other costs include energy bills and transport costs associated with taking children to school and other basic activities.

Reference

¹ https://aifs.gov.au/media-releases/new-estimates-costs-raising-children-australia

Next steps

Talking to a financial planner can help you understand your situation and make confident financial decisions (big or small) so you can get the most out of life.