By Rae Mok
As you await the arrival of your newborn with bountiful excitement, it is also natural that you worry about what the impending future holds for your adorable prince or princess. Not only do you need to plan your budget wisely for the arrival of your little one, you will also need to plan financially for your child’s future. To cope effectively with financial needs along your parenthood journey, getting insurance policies is something you should consider. Insurance can offer you protection, as well as help you save and invest for the long-term.
These days, there are so many types of policies, offered by insurance companies, co-operatives and even banks. With the dizzying array of plans available, it is crucial you pick the plans that best suit your budget and needs.
So how should you go about evaluating the plans and the companies/agents to purchase your policies from? Insurance plans are long-term commitments (usually 21 years for a newborn), so you should carefully evaluate your options before committing. Here are some factors that you may wish to take into consideration:
1. What? – There are many types of plans available in the market and you can’t actually compare them apple to apple as their terms and conditions differ, so do their coverage and even payout terms. You need to evaluate each plan against your needs, and what you can afford at the moment. If you are interested to invest in different plans, for example a life plan and an education plan, but are constrained by your limited budget, you can choose to purchase the one which you feel is more important, then top up with other plans when you can afford them. Every plan offered by different companies will have some unique selling points. For example, some plans cover child-prone diseases such as HFMD and SARS, and offer weekly allowances to parents who have to miss work to take care of their children who contracted the disease.
2. When? – As any insurance agent will tell you, the best time to purchase any plan is NOW! There is truth in this message. Insurance companies require full declaration of the insurer’s health condition at the time of purchase. Any health condition declared will not be covered in the plan, unless under special circumstances. Therefore, it is best to purchase plans as soon as the child is born so that he/she can be covered fully for any medical condition that may occur later in life. For example, if a child contracts bronchitis, which is a high occurrence childhood disease, he/she will not be covered for this disease if the plan was purchased after recovery.
3. How? – The most direct way to buy insurance policies is through the companies’ agents. You can get your friends to recommend their agents to you, or you can always write-in or call the hotlines and they will assign someone to you. Bear in mind to evaluate the agent at the same time you are evaluating the plan. It is unlikely for you to meet cheats in Singapore since all agents are licensed, but since this is a long- term relationship, you do want someone whom you can get along with and whom you can trust. If the unfortunate time comes when you need to make a claim, you would want someone who is helpful and responsible enough to assist you.
4. Where? – Once you have decided on the type of policy you want to purchase, you should do some research on the company concerned. All insurance companies have comprehensive disclosures on their websites that give all required information about their company and the plans they offer. If you are unsure of anything, you can always contact their customer service officers. You can also check with friends who have purchased policies from these companies. There are also websites that provide objective reviews of companies and policies.
5. Why? – Purchasing insurance policies is not the same as purchasing a consumer item, where you make purchases on impulse. You must first understand why you should purchase the policy by identifying your needs. Before you commit to any plan, it is also good to review your current coverage now that you have little ones to look after. You should approach a financial consultant to conduct a financial review, identify gaps and draw up a comprehensive financial plan for the entire family. It is important to understand and compare the different schemes offered by the different institutions before you make any long-term financial commitment.
Jacqueline Choo, a Senior Financial Consultant from NTUC Income, advises parents to ensure they have sufficient insurance coverage before they take up other plans for their children. “Most parents I encounter tend to be more interested in Endowment Plans such as an education savings plan for their children only. Parents are advised to review their personal insurance coverage first, to ensure that the family will be well-taken care of financially in the event of unforeseen circumstances.
Martina Ng, a 30-year-old mother of three children aged four, two, and six months, knows all too well the benefits of getting a medical plan for each of her child once he is born. She has already made three claims for her two-year-old son, Nathanael, from his medical plan. “The first claim was made when he hit his forehead on the table and needed to have stitches. The second time was when he fell from a barber chair and fractured his collarbone. For the most recent case, he fell from the bed and required an X-ray.” Martina recalled. She added, “Luckily for us, we bought both medical and education plans for all of our three children since birth, so we were able to claim in full for all three of Nathanael’s accidents, which chalked up a bill of approximately $800 in total. That reduced the agony we had to go through. It was already quite a handful to have to deal with an injured child, and we were glad we didn’t have to worry about the medical bills.”
With thanks to the following people for providing their professional advice:
Ms Jacqueline Choo, FChFP, AFC
NTUC Income Senior Financial Consultant
A Member Of The Million Dollar Round Table
Mr Loh Eng Kiat Daniel, B.Biz
Manulife Financial Planner
Email : Daniel.firstname.lastname@example.org