Personal Business: SMART MONEY
SOLACE WHEN ADOPTION DEALS SOUR
Shayna and Joel Billings thought their long wait to adopt a baby was al-
most over. They had found a willing birth mother, supported her financially during the last trimester, and were even there to cut the umbilical cord when she gave birth. But 11 days after the Billings took baby Jeffrey home, the biological mother changed her mind. Although the Billings were devastated emotionally, they got a measure of financial solace thanks to a little-known form of insurance that provides protection when adoptions fail.
"SECOND CHANCE." Luckily, after an earlier adoption attempt by the Mountain View (Calif.) couple soured when the father objected, the Billings had bought a $5,000 insurance policy--which recouped half the cost of Jeffrey's failed adoption. "It doesn't make up for the emotional pain of losing the baby," Shayna Billings says, but "this [insurance] gives you a second chance if it doesn't work the first time."
For a fee ranging from $750 to $1,950, adoptive parents can cover $5,000 to $30,000 of certain expenses if a birth parent decides to keep the baby. Developed and sold by San Jose (Calif.)-based Jardine Insurance Brokers' offices nationwide, and underwritten by Fireman's Fund Insurance, the policy is gaining popularity as adoption costs rise and cases such as that of Baby Richard, an Illinois 4-year-old who was returned to his birth parents after a protracted legal battle, draw widespread
Experts estimate that each year, 10% of the nation's 60,000 domestic adoptions fall through. The most common reason: a change of heart by the birth mother or, increasingly, by the father. Jardine says demand for the policy, which became available nationally in 1994, is up 70% this year. Only domestic independent or private adoptions are covered, but Jardine soon hopes to offer coverage for the 8,000 foreign adoptions that take place each year.
Available in 49 states--approval is pending in Virginia--the insurance makes the most sense in areas where medical and legal fees are high and state law does not restrict the amount prospective parents can spend subsidizing birth mothers. In California, for instance, private adoptions can typically cost more than $10,000. For many couples, losing that kind of money means giving up any hope of finding another child. "Many of these people have already paid tens of thousands of dollars for fertility treatments," says Art Adams, the Jardine executive who designed the policy. "They can't afford to take a chance."
Be careful, though. Adoption insurance is designed to protect the money prospective parents spend on a birth mother's needs--such as rent, food, medical bills, or counseling. Only 10% of the policy can go toward the adoptive parents' personal expenses. And the plan won't pay for a legal fight to keep the baby. Also remember that the policy protects you only if a birth parent reneges, not if you do. One option, available for an extra $200 to $450, pays you in the event of a stillbirth or miscarriage.
Is adoption coverage worth the price? Because the premium cost adds up to 10% to 15% of the policy's face value, "that makes it pretty expensive," says Robert Hunter, director of insurance for the Consumer Federation of America. But John Kozero, a Fireman's Fund spokesman, says the insurer has been paying out $1.08 in claims for every premium dollar taken in.
Lawyers warn that even with adoption insurance in place, spending large amounts of money on any potential birth mother is risky. "Even a woman who seems absolutely secure in her decision [to give up a child] can change her mind once the baby is born," cautions Aaron Britvan, an adoption attorney in Woodbury, N.Y. Nelson Schwartz