This article originally published by Logan Sachon and Rebecca Shoenthal on Policygenius.
Big life events – like getting married, starting a new job or having a baby – are a great time to reevaluate your finances. Most people automatically think about health insurance or setting up a college savings account when they have a new baby, but buying life insurance should be top of mind, too.
Life insurance allows you to provide for your family if you die and is an important part of financial planning as you expand your family. But when should you apply for life insurance coverage if you are pregnant? What if you have gestational diabetes? And how can you make sure that your unborn child is protected by your life insurance policy?
Many people don’t even think about shopping for life insurance until they actually have children, but it’s a good idea to plan for the future by buying life insurance coverage when you’re pregnant or even before you become pregnant. Below, we’ll explore the cost benefits of securing life insurance before you expand your family, and explain what to do if you’re shopping for insurance while pregnant.
Can pregnant women get life insurance?
Pregnant women can get life insurance coverage, with some caveats.
Insurance companies treat pregnant applicants on a case-by-case basis. Generally, women in their first trimester who don’t have pregnancy complications, a pre-existing condition that could lead to complications or a history of complications from previous childbirth, can get life insurance coverage at the same rates as if they were applying and were not pregnant.
If you apply in your second or third trimester, your application may be postponed until after you have given birth. However, there are many life insurance companies that offer coverage during any stage of pregnancy if you aren’t experiencing complications or haven’t experienced complications from a previous pregnancy, making shopping around amongst insurers a necessary part of the application process.
A postponed application doesn’t mean you won’t be approved for coverage in the future, but it does mean you’ll go through childbirth without coverage. If you find yourself in that situation, there may still be options available for financial protection through temporary life insurance.
Why does pregnancy affect life insurance rates?
Insurance companies think in numbers and probabilities, which means your life insurance rates are based on the estimated lifespan and future health risks for the average person like you. Your age, sex, weight, cholesterol, hobbies and your medical history are all considered when you apply for life insurance. There are two factors, especially, that can affect life insurance rates for pregnant women: weight gain and complications.
While most insurance companies will look at your pre-pregnancy weight when setting your rates, there are some that will set your rates using your current weight. Other companies just want to see that you’re gaining weight at “normal” levels and could increase rates if you’ve gained more than that. If you apply post-birth, many insurers will still use your pre-pregnancy weight up until six months after you have given birth, at which point you will be rated based on your current weight.
You can still get great premium rates in your first trimester, but if the underwriter finds any of your lab results to be abnormal or anything that suggests complications or a high-risk pregnancy, you’ll either be offered a policy with elevated rates or your application will be postponed until after you’ve given birth. These complications may include:
- Gestational diabetes from current or previous pregnancy
- Elevated cholesterol (though if you have proof of pre-pregnancy cholesterol levels you can sometimes get your life insurance company to disregard the pregnancy-related increase)
- Any complications in a previous pregnancy (some carriers include postpartum depression)
- Pregnancy age 45 or older (some insurers put this age at 35)
- Multiples pregnancy with triplets or more
Each life insurance company approaches pregnancy differently, and also approaches each application on a case-by-case basis. A Policygenius agent can help you choose the best life insurance company for your situation.
Do life insurance companies give you a pregnancy test?
During the life insurance medical exam medical examiners administer blood and urine tests — but they won’t test for pregnancy.
So how does the life insurance company find out if you’re pregnant? Part of your medical exam includes a verbal interview. If you’re asked if you are pregnant, you should answer honestly if you are.
If you don’t answer honestly (for this or any other question), and then die during your policy’s contestability period, your beneficiaries’ claim could be denied on the grounds that you lied about your pregnancy. Even after the initial contestability period, lying on your application qualifies as life insurance fraud and your beneficiaries could be denied the death benefit or required to pay additional premiums to the life insurance company to make up for the premiums you should have been paying for your specific situation.
When to apply for life insurance if you’re pregnant
The life insurance application process usually takes around four to six weeks. Rates go up alongside age and the development of any health conditions, so in general, it’s better to apply sooner rather than later. Technically, though, you can apply anytime during your pregnancy, and there are pros and cons depending on when you submit your application.
If you’re planning on starting a family, the best time to apply for life insurance is before you get pregnant. Life insurance rates increase by 4.5-9% each year you age. So if you know you want to start a family in the not-so-distant future, you can lock in affordable premiums now so you have cheaper insurance later. Not only does this ensure you get the lowest possible rates, but it also guarantees your family is covered if you die from complications from childbirth (though the chances are extremely low, the U.S. has the highest maternal death rates in the developed world).
If you apply for life insurance once you’re already pregnant, most companies will use your pre-pregnancy weight. Most insurers offer coverage at any point during a pregnancy. But if you have health complications or have a history of complications from previous pregnancies, your application could be postponed until after you give birth. Generally, the closer you are to childbirth, the more likely it is for your application to be postponed (and the higher your rates can be).
If you do end up with a higher premium rate or a lower health classification due to pregnancy complications (like gestational diabetes), most life insurance companies allow you to retake your medical exam again a year or two after your policy is issued. If your new exam results qualify for a lower rate, your premiums will be adjusted. (If they don’t, your rates won’t go up.) This one-to two-year window gives you time to normalize your health after a pregnancy. Since each company is different, it’s best to talk to your agent to confirm the timeline for your specific life insurance company, and mark your calendar to follow-up in a year.
If your application is postponed when you apply during your pregnancy or if you’d like to wait to apply until your rates will be lower, the four-to-eight weeks after you give birth are the next best time to apply.
By this point, your weight will likely be lower than it was during your pregnancy and any health complications from pregnancy, including elevated blood pressure and cholesterol, should be resolved.
You should note, however, that post-partum depression and gestational diabetes can elevate your rates for five years after you experience them. This is another reason why the best time to apply is before pregnancy or during the first trimester.
Naming your baby as a beneficiary
In community property states, you are legally mandated to name your spouse as the beneficiary of your life insurance policy. But if you don’t live in a community property state, naming a minor as your life insurance beneficiary is technically possible and some companies will even allow you to denote your beneficiaries as “all children in equal shares,” which means that you don’t have to update your policy as you have additional children. However, we strongly advise against this.
Most lawyers and financial planners will deter you from naming a minor as your life insurance beneficiary because it triggers additional complications. A court must intervene in order for a life insurance company to disperse the death benefit to your minor child if they are under the age of majority (18 in most states). This process could tie up the funds for years and lead to unnecessary legal fees.
There are several ways you can make sure your death benefit goes to your kid without getting a court involved: you can name your spouse or a legal guardian to oversee the funds on behalf of your children or you can create a trust or a Uniform Transfers to Minors Act (UTMA) account. Both are accounts set up for just this situation, and both require a lawyer’s help to set up. A lawyer will be able to help you decide which is right for your situation and write up the documents.
Life insurance riders to consider if you’re pregnant
Life insurance riders are optional additions to the terms and conditions of your life insurance policy. Common riders include the ability to convert a term policy to a whole policy or getting access to the death benefit early if you become disabled or terminally ill. There are many life insurance riders to consider, and your life insurance agent can help you pick which ones make the most sense for you. But there are a few that are especially useful if you’re buying life insurance in anticipation of a new baby.
Child riders pay out a small death benefit if one of your children dies. Considering funeral costs can top $10,000, the loss of a child can be devastating financially as well as emotionally. Child riders can help mitigate financial burdens.
A child rider essentially allows you to purchase life insurance for your children under your policy in “units” of $1,000 at an average annual price of $5 per unit (though some insurers charge more or less). The cost is added on to your yearly premium.
Each insurance company has its own coverage amounts, which is why it’s important to compare rates. For some insurers, that means a range (e.g. $1,000 to $25,000); for others, coverage is offered in two tiers (e.g. $5,000 or $10,000). For example, if you wanted $10,000 worth of protection, that could add $50 to the annual cost of your life insurance policy, or around $4.17 to your monthly premium.
As of September 2020, all of Policygenius’ partner life insurance companies offer child riders that are eligible to start when your child is around two weeks old and the term ends when they turn 18 (although some can last until your child is 22 or 25). Across companies, a single rider can cover all of the children in your household, so you don’t need to purchase additional riders if you have more children later.
There are some pros and cons to child riders. The biggest benefit is it can help pay for funeral expenses and is typically a much better deal than buying a separate life insurance policy for your child, which is usually prohibitively expensive and not recommended.
Disability income riders
It’s counterintuitive, but life insurance can also be used when you’re alive. If you’re injured and cannot work, you’ll still need money coming in to pay for your child’s needs until you recover.
That’s where long-term disability insurance or a disability income rider comes in. Long-term disability insurance is important because one in four workers will become disabled before they retire. A standalone long-term disability policy is usually your best bet in terms of the amount of coverage you can get – a good policy will get you close to your take-home pay – but a disability income rider can add a little extra protection to that life insurance policy you’re buying anyway.
If you don’t have long-term disability insurance or you can’t afford it right now, adding a disability income rider to your life insurance policy can help.
You might also have a significant other in the picture. If that’s the case, a spousal rider can provide protection for them, too.
A joint life insurance policy is a possibility, but it’s not usually the best option because of the price (joint life insurance is usually a permanent policy, so it costs more than term life insurance. Joint insurance can also get confusing when you get into the difference between first-to-die and second-to-die policies and what to do if there’s a divorce.
Buying separate term life insurance policies for both you and your spouse is usually the wiser choice. A good alternative is including them in a rider on your own policy.
Whether you’re thinking about expanding your family, are already pregnant or are a new parent, life insurance should be at the top of your financial check-list. Life insurance serves as an income replacement if you die and can provide vital funds for your child’s future.
Because the price of life insurance increases as you age and since pregnancy causes health fluctuations, the best time to lock in the cheapest rates is before you become pregnant, but you can still apply at any time for coverage.
Each company treats pregnancy differently, so comparing quotes and working with an independent insurance broker like Policygenius is the best way to secure the right coverage for you and your growing family.