By Matt Becker

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I recently ran into something with a client that I immediately knew was worth sharing here.

This couple is due to have their first child soon, and like any good parents they wanted to make sure they had a strong foundation of financial security in place.

They had already done a fantastic job of building up enough savings for a healthy emergency fund, so we moved on to the next big items on the checklist: life and disability insurance.

They filled out their initial applications for both, but when the preliminary quotes came back we got some bad news.

Because the wife was so far into her pregnancy, she wasn’t going to be able to get long-term disability insurance right now. And while she could probably get life insurance, it would likely be at a lower health rating and would therefore be more expensive.

Now, it’s all mostly worked out okay for this client, as she had some other options available to her. But it serves as a good lesson.

So in this post I’ll explain why it’s hard to get life and disability insurance late in pregnancy, why it pays to get it early, and what you can do if you find yourself in this same situation.

Why the third trimester is too late

In my practice I have the good fortune of working with a fantastic independent insurance agency that not only helps my clients get the best insurance possible, but is more than happy to educate me when there’s something I don’t know.

In this situation, what I learned from talking to them is that women who are in their third trimester of pregnancy are essentially uninsurable when it comes to long-term disability insurance. From the insurance company’s perspective there’s simply too much risk involved at that point to issue a policy.

As for life insurance, you would be able to get it at this point, but there are two issues to consider:

Because pregnant women have naturally higher cholesterol, most will likely receive a lower health rating and therefore pay a higher premium. Why can’t insurance companies just factor this naturally occurring phenomenon into their rating system you ask? Well, good question. I don’t know. In an ideal world you would apply for life and disability insurance at the same time so that you would only have to go through a single medical exam that could then be used for both applications. But in this situation you wouldn’t be able to do that, since disability insurance is already off the table.

So while women in their third trimester aren’t totally out of luck (more on your options below), it’s better if you apply for life and disability insurance earlier.

The best time to apply for life and disability insurance

The best time to apply for life and disability insurance is just before you start trying to get pregnant. Here’s why:

You’re at peak health, without any of the naturally-occurring health changes that come with pregnancy.

Insurance companies may not be quite as worried about scrutinizing your medical records, since they don’t need to check to see how the pregnancy is going.

All of which means you’re more likely to get a better health rating, and therefore a lower premium.

And as an added bonus, if you get these things handled early you’ll have more time and energy later on for the more enjoyable aspects of preparing for your baby.

The 2nd best time to apply

If you can’t apply before you get pregnant, the second best time to apply is in the first or second trimester. The earlier the better.

The good news is that you should be able to get both life and disability insurance if you apply before the third trimester. But it will come with a couple of catches:

You will still likely get a lower health rating for life insurance because of elevated cholesterol, which means higher premiums. You could then reapply a year or so after the birth to try for a better rating. Your disability insurance would come with an exclusion for any complications resulting from pregnancy. You would likely be able to have that exclusion removed later on, assuming you didn’t actually end up having any complications.

In most cases it will still be a good idea to go ahead with both applications if you can, even with the issues above. The coverage is still incredibly valuable.

What if you’re already in your third trimester?

If you’re already in your third trimester and you need both life and disability insurance, you have a few options.

Option #1

Get life insurance in place now, even at the lower health rating. Apply for disability insurance after your baby is born, typically after your 6-week postpartum checkup. You will have to go through a second medical exam. Assuming you are in good health, reapply for life insurance about a year after the birth with the hope of receiving a better health rating and reducing your premium.

Option #2

Wait and apply for both life and disability insurance after your baby is born, typically after your 6-week postpartum checkup. This will only require you to go through a single medical exam. Assuming you are in good health, reapply for life insurance about a year after the birth with the hope of receiving a better health rating and reducing your premium.

Option #3

This isn’t really a third option so much as it’s something to look into in addition to the options above.

You should check your employee benefits program to see what you’re offered for both life and long-term disability insurance. You may already have some coverage and you may also be able to increase your coverage for one or both.

At the very least, that could help hold you over until you’re able to secure individual coverage at a later date.

Resources to help you get started

If you’re planning on starting a family in the near future, hopefully this helps you get the right insurance in place sooner rather than later. And if you’re already far along in your pregnancy, hopefully this gives you a good sense of your options going forward.

Either way, if you’d like to move forward with either life or disability insurance, here are two resources that explain what they are, why they’re important, and how to get them:

Do you have any questions about life and disability insurance? Let me know in the comments and I’ll do my best to help.