Adoption & Insurance
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There are two basic ways insurance can be of benefit in the adoption process: to prevent excessive financial loss, and as a source of funds to help cover expenses.
Adoption Disruption Insurance
Often called "adoption insurance," Adoption Disruption Insurance (ADI) helps families within the United States who are adopting domestically to recover qualifying expenses if for some reason their adoption is disrupted or not finalized. Typically this is only available to families who are adopting a child under 2 years of age. There are two options available at the present time:
There is an ADI policy underwritten by Philadelphia Insurance Company and endorsed by the insurance broker, Rose and Kiernan and promoted by the National Adoption Foundation.
A second ADI option is through Adoption Assurance. It is underwritten by Markel North America Insurance Group, and available to families living in the following states: CA, FL, HI, LA, NJ, NY, PA or TX. The adoption can take place in any state.
Carefully read through all the details of each policy and be sure that you fully understand what is covered under the policy and what is not, and research the companies.
Borrowing Against Your Insurance Policy
Some types of life insurance policies allows the policy owner to borrow from the accumulated cash value in the policy, and this can be used as a source of funds to help pay for adoption-related fees. Some insurance companies continue to pay interest on the full cash value, but the interest you are required to pay on the amount you borrow may be more. Keep in mind that hand-in-hand with borrowing is repayment. If the policy owner dies before full repayment is made, the amount that has not been repaid will be deducted from the insurance benefits paid. Talk to your insurance agent and be sure to ask what, if any, penalties are involved.
