Arguably the most transformational event you will ever experience is becoming a parent.
Amidst the anticipation and happiness, there will also be a significant financial impact on your life. A report shows that the “Estimated cost of raising a child in Singapore range from around S$200,000 at the low end to a seemingly astronomical sum of nearly S$1million at the high end, with about S$360,000 as a middle-range average.”
Those numbers are daunting. The logical question is “Can we afford to have children?”.
To that, we say, YES. You can baby-proof your finances. But you will need to plan and make smart financial decisions. We invited Mr Paul See, Founder of Priority Wealth Pte Ltd, who has 23 years of experience in the financial industry, to share his tips and advice when budgeting for a baby.
“Start your financial planning as early as possible, preferably 2 years before conceiving. This gives you time to budget and make the necessary changes before welcoming the baby.”
Stage Zero – Get Ready
This starts 12 - 24 months before conception. With all the necessary preparations and cost-saving ideas, there is one cost that CANNOT be avoided, that is your medical costs before and during delivery.
2. Private or Subsidised
Prenatal visits to private obstetrics and gynaecology (O&G) Clinic can cost S$100 to S$400 per visit, with additional costs for tests and scans. The initial visits would be as frequent as once a month, which would progress to weekly visits towards the end of your third trimester.
Subsequently, the big day comes with a big bill. Delivery for natural birth in a private hospital in Singapore can cost S$10,000 - S$15,000 or more depending on the ward accommodation preferred. A Caesarean section is approximately S$15,000 - S$19,000 or more. If complications arise for the mother and/or baby, prices may escalate significantly.
Government Restructured Hospitals
You can consider going to a government restructured hospital for a slightly lower cost, you will be entitled to further subsidies if you opt for the subsidised class by getting a referral from the Polyclinic.
But you’ll have to be prepared to be seen by a different gynaecologist with every visit. Consultations can range from S$30 –S$40, with additional costs for tests and scans. Delivery for natural birth in a restructured hospital can cost anywhere from S$5,500 and above, while caesarean delivery in a government hospital can cost anywhere from S$9,000 and above.
3. MediSave Maternity Package
Regardless of whether you choose the private or subsidised route, your MediSave can defray some of these costs. In 2019, the government introduced the MediSave Maternity Package (MMP) which can cover pre-delivery medical expenses such as consultations, ultrasounds and other required tests, as well as delivery expenses, capped at certain limits.
Image source: madeforfamilies.gov.sg
4. Maternity Insurance Cover (MIC)
But there is one little known way to reduce your costs. A Maternity Insurance Cover (MIC) from an International Health Plan that specifically includes prenatal check-ups, delivery cost and neonatal medical expenses and any hospitalisation medical expenses. This is not to be confused with the more commonly known Maternity Insurance Plan (MIP). A quick summary is shown below in Diagram A:
This table is a generic summary, it may not be complete. Please refer to the actual contract and/or product summary/factsheet. This does not construe any advice or buying guide. Please consult your financial adviser for professional advice on suitability.
5. Maternity Insurance Cover
Maternity Insurance Cover (MIC) covers the cost associated with the development of the foetus and the birth of a baby. In Singapore, these are commonly found bundled with International Healthcare plans. Such plans cover the mother’s entire period of maternity and can include pre-natal medical costs as well as delivery charges. It also covers for the mother and the newborn, if birth complications occur.
It is important to note that Maternity insurance Cover (MIC) policy needs to be bought about 12-24 months before conceiving. This is because such plans will have a waiting period ranging from 12-24 months, during which the benefits are not payable. Hence, plan early.
Stage One – Get Set
You’ve conceived. Congratulations! As life grows within you, we must be prepared for when life comes out.
While life is beautiful, life is about challenges being thrown at you. Every pregnancy carries a risk, the good news is Singapore carries the lowest infant mortality rate globally, and this can be attributed to a good healthcare system that is accessible to the majority of the population.
6. Maternity Insurance Plan
Maternity Insurance Plan (MIP) (Sometimes called Pregnancy Insurance Plan) is an insurance that provides coverage for pregnant women and their newborn child. This insurance is typically available after the first trimester, and before week 36 of pregnancy (varies from insurer to insurer). The coverage can stretch to the 3rd year of the child's life.
The maternity insurance plan is designed to pay a lump sum in event of specified conditions for both mother and child. Certain neonatal congenital illnesses will be covered. Critically, the main focus of a MIP is that it is usually bundled with a life insurance plan. The strength of such coverage is that it is transferrable to the child without medical underwriting. Parents who buy this have the privilege to cover the child immediately upon birth. Even if the child had complications during birth, the life insurance will be incepted without further medical underwriting. Typically, these bundled products are tagged to an Investment-Linked product or Wholelife plans, so a careful study of the bundled products is a must to ensure proper coverage.
Standalone MIPs are simpler and cover certain events and illnesses. These plans provide the same level of cover as a bundled plan, but it may stop short of providing an option to insure the child from birth.
“While it is not uncommon for couples to start planning only when they find out that they are expecting. As we have seen, there is a lot that can and needs to be done; but they all take time. Some of the strategies need to be done well before conception. The key is to start planning early. Early planning gives you options; it can also lead to cost savings and enhanced protection.”
Becoming a parent is an incredible life experience. It is fraught with challenges, stress and uncertainty, but also hope and love. Proper planning and tools to help manage the concerns. On top of protection, that there are many other areas, including education financing planning, estate and legacy issues that are important to make the entire life journey a rewarding one. It’s important to have a consultant who is willing to journey with you on this epic life experience. A consultant who has access to multiple insurers is better equipped to create holistic financial plans as he or she will have more solutions.
Every pregnancy is a once in a lifetime experience. With the proper risk mitigating strategies in place, you can safely “Go forth and multiply.”
I Love Children thank Mr Paul See for his valuable advice.