Financially Protecting a Newborn Baby

Financial protection for a growing family becomes a concern with the addition of a new family member. A newborn baby brings many challenges and redistribution of priorities, particularly in the financial sphere. While there are many other challenges and roles that new parents have to face, financial protection for newborn baby usually precedes all others. This one factor affects a child’s future as well as the current, immediate needs and requirements. It is a huge financial decision for the parents to redistribute their wealth for the upkeep of a newborn. 

So what does financial protection for a new-born baby entail? There are many factors and decisions that answer this question. A health insurance policy is usually the basic necessity, but there are other financial vehicles that can take new parents a long way. 

  • Term Life Insurance 

A term life insurance is a basic, often necessary financial tool that one can use as financial protection for growing family. This extends to anyone who has any family dependent on them, like a child, parent, spouse or anyone else they are protecting for their best interests. This includes making a minimum payment every month to protect the family from unexpected disasters. This type of insurance also happens to be affordable and is almost covered in the same cost that a month of eating out would cost. There are also life insurance calculators available online that can help estimate the coverage that may be required. 

  • Tax Forms and Tax Breaks 

There is a new Tax Cuts and Jobs Act (TCJA) that can affect new parents due to its very definition. What it essentially does is to remove the exemption for dependents while still keeping the claim for Child Tax Credit (CTC), along with other benefits. This means that the amount gets doubled, and new parents can make use of this to save a lot more money than what they previously could. Moreover, the increase that comes in the income limit over which tax credit becomes applicable helps bring more families under this act. Dependent Care Credit and  Earned Income Tax Credit are examples of good tax-saving tools as well as financial protection for a growing family that can be and should be made use of. 

  • Health Insurance Plan 
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A health insurance plan is usually in place for most families even before a baby is born. Such insurances can be upgraded in cases of a life-event, like having a baby, retiring, or changing a job, It is simply a means to keep up with changes in the living status of a person. Such health insurances offer the room to make changes into the policy within a 45 to 60 window from the date of intimation of a life event. One can add the baby as a beneficiary and reap the rewards accordingly. 

  • HSA Contributions 

Health savings accounts offer very good pre-tax benefits and should be considered by all new parents. These HSA contributions can help cover different healthcare expenses. This type of insurance can help keep up with the increasing expenses and also provide another layer of financial protection for growing family.