What Insurance Should You Get For Your Child?
With so many bills to pay, which policies are a must-have vs. a good-to-have?
By Dawn Cher -
As a first-time mother, one of the biggest concerns I had was over what type of insurance plans I needed to get for my child.
With so many to choose from, it can be easy to get lost in the details. Most financial advisors will also encourage you to buy as many as you can afford, but you will need to ultimately balance this against your other financial commitments (including your mortgage, household bills and more).
So before you rush to buy insurance for your child, here’s a quick breakdown on five popular insurance types that many parents in Singapore often get.
All newborns in Singapore are automatically covered under MediShield Life, but if you want extra coverage against higher medical bills, or even to reserve the option of getting treatment in a private hospital (especially if your preferred specialist practices there), then you may want to explore getting an Integrated Shield Plan.
The earliest you can buy this for your child would be after 14 days of birth, and you can always choose to downgrade the coverage later if you need to.
However, premiums are not cheap and generally run close to $1,000 per year for young children. As you can only withdraw a maximum of $300 from your MediSave to pay for this, you will have to pay the rest of it in cash.
If your budget is extremely tight and you cannot afford an Integrated Shield Plan, your child will still continue to be covered for hospital bills (albeit in lower-class wards in public hospitals) under the national MediShield Life scheme. This should generally be sufficient as long you stick to subsidised treatment in public hospitals and do not go via the private specialist route for your child.
While an Integrated Shield Plan can be optional, one plan that almost every parent should consider getting is a Personal Accident plan.
My child is barely five years old, but I’ve already lost track of the number of times we’ve claimed from his accident insurance policy — be it for a chipped tooth from falling down or his medical bills from Hand Foot Mouth Disease (HFMD) which he caught from his childcare centre.
Children are generally more accident-prone than adults as they have less awareness on danger and hygiene, so this is a good basic plan to consider getting so you can claim for their doctor visits (due to insect bites, falls or cuts), or even the spread of infectious diseases like HFMD or dengue fever.
The good news is, these aren’t expensive, with the cheapest option costing slightly over $100 a year.
When a child is diagnosed with a critical illness, a parent often has to take time off work to be their caregiver and accompany them to all their treatments. This often results in a loss of income, which can make it even harder to keep up with all your household bills, not to mention treatment costs.
A critical illness policy can help to solve this issue, as it pays a lump sum when a critical illness is diagnosed, even if there is no hospitalisation or when outpatient treatment is provided. This also serves as a buffer against the parent’s loss of income during this period, so you can focus on helping your child recover.
Life insurance is usually bought to replace the income of the insured life, which makes it important when you have dependents. Since your children are still young and there’s no one relying on them for money, most people will say there is no real need to buy life insurance for your child.
However, for parents who have opted to buy whole life plans for their child, this is usually because they intend to secure the coverage while their child is still healthy and insurable, which translates into lower premiums. This is then meant to be passed on to the child when he/she comes of age with no exclusions for any health conditions that they might have developed then, for them to take over the plan and pay less than what their peers would be paying.
Whole life insurance is a significant financial commitment though, and most premiums often cost between $1,500 to above $2,000 a year, so not every parent may be able to afford it, especially if you have more than multiple children.
Some parents opt for endowment plans to help them save up for their children’s future education costs, especially since university tuition fees are not cheap.
Endowment plans have a scheduled payout period, so it can act as a “forced” savings plan for those who do not have the discipline to save up by themselves. Due to its long lock-in period, you will also need to be sure that you can financially commit to this plan to avoid a penalty fee, or worse, incurring losses due to early termination.
As parents, it can be tempting to want to protect our precious children as much as possible. However, insurance is not cheap and is often a long-term financial commitment, especially if you choose to go with whole life or endowment plans.
If you have more than one child, the premiums will also quickly add up. Hence, be sure to prioritize which coverage matters most to you, and then set aside enough budget to make sure you’ll be able to pay for the premiums.
Remember, while insurance is important, there are also many other ways we can protect our children — even if we cannot always afford the best financial safety net for them.
Dawn Cher is a mother of two boys and the founder of financial blog SG Budget Babe. Work aside, she is proudest about having lost 20kg in a year, becoming lighter than her pre-pregnancy days. She believes in fairytales (don't tell her otherwise!).