What insurance does a child need?

Hi anon,

Definitely. Risks are unavoidable in life as life is uncertain, and insurance is meant to reduce or remove the financial impact of those risks.

Without a doubt, the first insurance you need to get for your child will be a hospitalization plan. Singapore has rather high health care costs and a single night's stay in a hospital can be the equivalent of a week's wages for most people.

Such plans cover any hospital bills and associated pre/post hospitalization costs. With a rider to take care of the deductible/co-insurance, your out of pocket payment will be minimized. Depending on your budget, you can take a private hospital plan and downgrade later, or just go for Goverment A ward.

Following that, I would say that you can consider an education plan if you wish to set aside some funds to deal with education costs in future. Such plans will grow your money in a safe manner and it will mature around 18-25 years in future, so that funds can be made available for school fees (university fees will be huge in 20 years). If your child manages to get a scholarship in future, the money is still yours as you are the policyowner.

If budget permits, a whole of life critical illness plan can also be considered. Due to the age of a child, the premiums will be extremely low. As a live data point, a recent client of mine purchased a lifetime of $200K CI/early CI cover for their son and it cost $197/mth for 10 years (they are done with the premium when he turns 11).

Some see this as a gift of love, but I personally think that the more important thing is insurability. I have come across a young student aged 21 who was diagnosed with lupus at the age of 18. She is completely unable to buy critical illness cover now, and can only rely on a $50K late CI plan her father bought for her when she was 1 year old. At least she still has some coverage even before she started working.

An accident plan will be important once your child starts to learn to walk and run, as they are more inclined to get bumps and bruises, fall down, etc. They are also prone to things such as HFMD and some accident plans will cover such things.

If budget is tight, just focus on the hospitalization plan first. That's pretty much non-negotiable. The rest really depends on your cashflow, but will definitely be helpful.

Hi,

The answer to this is Yes. Yes, you must have think that your child is perfectly healthy and are not even working at the moment and the family is not depending on them to put food on the table. So why waste money buying insurance for them?

However, kids are still prone to illnesses and accidents. There is no guarantee that young children won’t develop major illnesses. What happens if your child is hospitalised? Your integrated shield plan only covers your own life. If your child is not covered with an integrated shield plan, you will have to fork out the medical fees in cash.

Personal Accident plan is also important because kids can get into all sorts of scrapes, injuring themselves or worse. An accident plan will make compensations from minor injuries to major injuries.

The third kind of insurance policy that a child needs is an Early Critical Illness plan. This is because if a child is diagnosed with a critical illness, most likely one of the parent will leave his or her work to look after the child. The lump sum payout from the critical illness plan can then make up for the income loss. It can also be used to help pay for the treatment.

So these are the three most important insurance policies (Integrated Shield plan, Personal Accident, ECI) that a child needs. And to be honest, this is also the best time for them to get an insurance because of their age and health. Their premiums will also be cheaper at their age. So please do not ignore your child insurance coverage.

Feel free to contact me (email at bio) if you are interested to find out more.

Cheers.​​​