Pregnancy comes with mixed feelings. On one hand, you’re elated and on top of the world; on the other hand, you can’t help but worry about the risks associated with pregnancy. The thought of leaving your loved ones destitute in the event of death is scary and nerve-racking. But as unpleasant as the thought may be, you have to think of what to do to cushion your family financially, if the worst were to happen. It’s an issue that has to be confronted sooner rather than later. That’s when life insurance and pregnancy need to be discussed together.
Life insurance is an agreement entered into between an insurer (the insurance company) and the policyholder (the person taking out the insurance). The agreement guarantees that the insurer will pay the policyholder’s named dependents a sum of money agreed, in the event of the policyholder’s premature death. To enforce the agreement, the policyholder is required to either pay an upfront single premium or regular premiums. The agreement together with other associated documents is contained in a policy document.
There are two types of life insurance:
- Term Life Insurance: As the name suggests, term life insurance is taken out for a limited period of time, mostly between 10 to 30 years. It’s temporary and provides cover when needed. Some people take it to shield them from any eventualities that may occur when the children are still at home, attending school or college, or until they’ve paid their mortgage.
It’s the most preferred form of insurance cover because it’s much cheaper and straight forward. It can be renewed or converted to whole life insurance.
- Whole Life Insurance: Whole life insurance also known as permanent life insurance, is a lifetime insurance cover. It remains active throughout the policyholder’s lifetime subject to the policyholder’s payment of premiums. It’s more expensive than life insurance. However, it comes with extra advantages. For example, you can use the policy document as collateral, and the invested money attracts interest.
The Cost Of Life Insurance
Purchasing life insurance during pregnancy is a smart move. Knowing your loved ones are covered gives you peace of mind. But the concern is always how much it’ll cost. The purpose of insurance is to cover the risk. In your first trimester, the rates will be lower because you’re less likely to have complications. Your weight is most likely also still within the normal range. Getting life insurance at this stage is recommended to mitigate costs.
And even if you have an existing life insurance cover, it can be altered to incorporate your pregnancy risks. The alteration may not change the terms of the cover much.
Moreover, you should note that the condition of your health before pregnancy will determine your rates. If your pregnancy falls within the normal range, your rates will be lower. This will be determined by your pre-pregnancy health records and tests carried out during pregnancy.
A normal range means that:
- you’re under 40 years of age,
- your blood pressure and BMI are normal,
- you’ve no pre-existing conditions,
- your weight is considered normal during the pregnancy,
- you’re pregnant with one baby,
- your pregnancy is not regarded high-risk, and
- you’ve no history of complications from previous pregnancies.
Pregnancy Life Insurance Riders
Riders are extra benefits that are tied to your life insurance cover. They come at an added cost. Just like life insurance, they can only become effective when their covered contingencies occur. Here are term riders common among life insurance policies:
- Child Term Rider: The idea of losing a child is inconceivable. But it’s a reality that you may have to deal with. This rider takes care of burial expenses in the case of the death of a child.
- Disability Income Rider: Complications from a pregnancy can arise where you may need special care or become incapacitated. During that time. your income may be affected. This rider will cover for your living expenses during that period by offering a stable income.
- Accidental Death Benefit: Life happens. In case you die accidentally, the named beneficiaries will be paid an extra lump sum by the insurer on top of the insured sum.
The insurance cover you settle for will be determined by your income. When deciding the amount you want to insure, you should take into consideration things like your children’s education, mortgage, and everyday expenses. It’s recommended that you get covered for five to ten times your annual income or your partner’s income.
Naming A Beneficiary
When naming a beneficiary, it’s only natural that your partner comes to mind first. But an alternate beneficiary should also be named in the event that your partner also passes away. If the named beneficiary is a minor—primary or alternate—then a custodian also has to be named. The custodian will take care of your child until they can take care of themself. This has to be someone you completely trust to faithfully administer the money paid out by the insurer.
Where To Buy Life Insurance
Depending on where you live, you can buy life insurance through an insurance agent, your employer, professional organizations, among others.
Nonetheless, you have to be cautious when looking for an insurance company. Take the following precautions before buying life insurance or any insurance cover for that matter:
- Find out if the insurance company is licensed. This way, you’ll be assured that the relevant oversight authority will assume responsibility should the insurance company default or close down.
- Check out the company’s credit ratings so that you don’t sign up with a company that is soon going under.
- Find out about the company’s reputation and history. See the reviews left by customers on their websites and enquire about them from friends.
- Make sure that apart from being experienced, they also offer that particular insurance you require.
The thought of taking out insurance is always associated with deaths, disasters, or any adverse events. Most people tend to push back the thought or make a mental note to deal with it later. When misfortune strikes and strikes unexpectedly, you can be caught off guard and left vulnerable.
There’s nothing better than the assurance that your family will be provided for financially in case anything happens to you. Therefore, it’s imperative to take out a life insurance policy. If not for anything else, then for your peace of mind.
Sara Northcott is an insurance agent. She has been running an insurance agency for over five years now. Her area of specialization is policy renewals and tracking claims. She is an adrenaline junkie who loves bungee jumping and ziplining during her free time.