I can’t think of many types of insurance where you have a reasonably high likelihood of making money. Insurance is typically used to hedge against risks that although very unlikely to occur, could be catastrophic if they did occur. When you do sustain a covered loss, insurance generally attempts to put you back in the same financial position you were in before the loss occurred (or close to it). I believe Aflac’s supplemental maternity insurance may be an exception to this general rule.
Co-worker Maternity Insurance Tip
A number of years ago when I had just graduated from college and started working at my first job, I overheard some of my co-workers discussing how they made money when their children were born using Aflac supplemental maternity insurance.
We lived in a very family friendly part of the country at the time, and many of my co-workers had quite a few kids. If anyone would know how to make money using maternity insurance it would be them. I had never heard of this so I decided to look into it.
Meeting with Aflac
We contacted Aflac and they were kind enough to send over one of their representatives to talk to us. We told her we were interested in learning more about Aflac’s supplemental maternity insurance policy. She kindly explained to us that they don’t have a separate supplemental maternity insurance policy, but that they had 2-3 different plans that each provided some maternity benefits, in addition to numerous other benefits.
She provided us information about these plans and explained that you have to be signed up for at least 10 months before having a baby in order to receive the supplemental maternity insurance benefits. In other words you couldn’t already be pregnant when you signed up if you hoped to receive the maternity insurance payout.
Aflac Supplemental Maternity Insurance Policies
The Aflac plans that we were told about that day are not designed to replace your regular health insurance. They won’t earn you a discount at a doctor or hospital and most importantly they won’t protect you from financial ruin should you have very high medical expenses. Instead they are designed to supplement your regular medical insurance.
The helpful Aflac representative explained that in exchange for a monthly premium, Aflac pays cash directly to you each time you meet certain requirements, are diagnosed with certain types of illnesses, or incur certain types of medical expenses. Many of the payouts ranged from $10 to the low hundreds of dollars, with the highest probably being around $1,000 or so.
We quickly looked over the plans, what they covered, what the various payouts were, and how much they cost. The plans we looked at had a long list of things that they paid out for and also listed how much they paid out for each item. For example, one plan may have looked like this:
- $25 each time you go to the doctor during the year (up to 3 times)
- $500 for every day you spend in the hospital (up to 3 days)
- $10 for well baby visits
- $300 if you have an appendectomy
- $600 if you develop pancreatic cancer
The list was fairly long but most of the higher paying items probably wouldn’t apply to the average person (i.e. many types of cancers, etc).
Another plan may have looked like the following:
- $350 for a regular baby delivery
- $700 for a Caesarean Section
- $50 for having a mammogram
- $25 for receiving an annual physical
- $200 if you require an ambulance for any reason
As promised, each of the 2-3 plans she showed us covered various maternity related and non-maternity related events, had different payout amounts, and had different premiums. There wasn’t a single plan that contained all of the maternity benefits; instead, they were spread amongst several plans.
Making the Decision
Being a numbers guy I quickly ran the numbers in my head. I compared how much I would likely make with each plan with how much each plan would likely cost me. There were 2 plans that seemed to make financial sense to me as long as it didn’t take us forever to have a baby and one that didn’t seem to make sense. Between the two policies, we would be paying about $100 a month in premiums, but I calculated our maternity insurance benefits (payouts for doctor visits, delivering the baby, staying overnight in the hospital, etc) would total about $3,800. We signed up for those two plans.
My wife and I were already trying for our first child at the time. I figured that if I found out in the next 4-6 weeks that my wife was pregnant that I would cancel my Aflac policies and be out a maximum of $100 or so. What I didn’t want to happen was for us to sign up for the policies only to have the baby born right before the 10 month period had passed and therefore be ineligible to receive the maternity benefits and be out $1,000 or so.
Our First Experience with Aflac
Well, it took us a few more months before my wife became pregnant. In total, about 13 months passed between when we signed up with Aflac and when our beautiful baby was delivered. We received little payouts here and there during my wife’s pregnancy (i.e. for doctor visits, etc), but the bulk of the $3,800 was received once the baby was born (i.e. payouts for staying in the hospital, delivering baby, etc).
Once we had our baby, I took another look at the two plans to see if we should keep them or cancel them. I realized that in our case if we continued on those plans, we would likely be paying much more than we would be receiving, so I cancelled them. We made $2,500 doing this with our first child ($3,800 – $1,300). We have repeated this process.
Having a Baby is Expensive
Having a baby is expensive. I work for a good company that provides me with health insurance, but I still have to pay thousands of dollars out of pocket each time we have a baby. Even if you have amazing health insurance that costs you nothing, there are many other expenses that arise when you have a baby. Aflac supplemental maternity insurance may be one option to help alleviate some of these financial burdens.
Risks of Using Aflac Supplemental Maternity Insurance
The big risk I see in doing what I did is the risk of taking a long time to become pregnant, or being unable to have children. If it had taken my wife a really long time to become pregnant or if we had been unable to have children, then we likely would have paid more in premiums than we would have received in payouts from the maternity insurance.
Doing what I did may not be right for everyone and I’m not telling you to go out and do what I did. Some couples may not want the added pressure to get pregnant quickly while trying for a baby. Others may not want to take the risk of losing money or may not want to deal with another insurance company. Perhaps you are in a state where the Aflac payout is less than in other places. There could be a number of reasons why this may not be right for you.
On the other hand, some people may sign up for the policies, decide they like the other benefits in addition to the maternity benefits, and decide to keep the policies for a long time. Others may not even be interested in the maternity benefits but may sign up for the policies because they find the other benefits attractive.
Other Insurance is Different
Please note that I definitely don’t recommend this approach for other types of insurance. For example, the odds may not be super high that I will ever get in a serious car accident, that my house will burn down, or that I will die prematurely.
That being the case, there’s a good chance that I will pay more in premiums than I will ever receive back from the insurance company on my auto insurance, home insurance, life insurance, and other types of insurance. Does this mean that I shouldn’t have them? Absolutely not. I maintain these types of insurance in case my home burns down, I get in a serious car accident, or I die prematurely, not because I think it will happen.
I see Aflac’s supplemental maternity insurance as being different. It isn’t acting as a backstop to protect me against financial ruin like health insurance or other types of insurance, such as those listed above. It just pays me out some money if certain conditions are met. So it’s not really the end of the world if I don’t have it.
Final Thoughts and Tips
- My youngest child is about a year and a half old, so I haven’t dealt with Aflac for a year and a half. It’s possible that their supplemental maternity insurance policies have changed since then, so make sure you do your homework and read all the terms and conditions of any policy you are considering.
- If you plan on having a baby in the near future, it doesn’t hurt to look into this. Run the numbers and take other important factors into consideration to see if it makes sense for you. If it doesn’t, then walk away at no cost to you.
- If you decide to do this, don’t cancel your regular medical insurance. They serve completely different purposes.
- I have only taken out supplemental maternity insurance through Aflac. I don’t know if there are other providers who offer the same thing and if so, what their terms and conditions are.
- The terms of these supplemental maternity insurance plans varies by state. I have used Aflac in multiple states, and the terms were different in each. Some states will obviously have more favourable terms than others, but we have managed to make money each time we have done this. I’m sure some people have lost money though.
What are your thoughts about Aflac Supplemental Maternity Insurance? Is it something you would be interested in looking into? Why or why not? Leave a comment below!