As parents, are you concerned about the rising cost of education for your child? Are you worried that you don’t have enough money for your child’s future education? Should you buy a life policy or education policies? Apparently these are the top few questions that most of my clients are facing and I have thought to address this issue over here. These days, being a consumer who is constantly being bombarded with information from your insurance adviser and even banks on insurance policies, saving plan for your child, are you having trouble deciding what is best for you? I hope this article will be able to help you…

In general, the types of insurance policies are recommended for family with young children to provide for coverage from hospitalization, education to lifetime savings are as follows:

Private Shield Plan. The first and foremost important coverage for a new young member in the family is a shield plan. The purpose of such shield plan is to ensure that the family finance is not wiped out in case something unfortunate happens to the child. One of the example was about an old man whose 40 years of CPF was wiped out in 3 months due to her daughter illness. It was really a very sad case and this incident truly impacted me the fact that Shield plan is very important. The Shield plan normally covers a child’s hospitalization fees, pre-hospitalization and post-hospitalization consultation and medication fees. The basic Shield plan( known as Medishield) offered by CPF covers till age 85 and subject to deductible and co-insurance, meaning you have had to pay some of the charges. Most shield plan offered by insurance agencies covers for the entire life and optional low-cost rider to cover the deductible and co-insurance. Shield plan should be bought as soon as the child is born.

Education Policy. Education policy is a better alternative to regular saving. Instead of just putting a regular amount to the bank savings account that earns you pathetic interest per annum, you should buy an education policy instead. One benefit of buying such policy is that it creates a saving habit for you and at the same time, gives your child some form of insurance protection. Some investment savvy parents may consider taking up a regular investment saving plan which means the amount that they put in every month is fully invested. This school of thought takes advantage of the dollar cost averaging strategy which works well especially if you have a long term appetite. Most education policy yields better returns when you buy earlier for your child. So, switch from regular saving to education policy early especially for your girl who is likely to enter tertiary education at 19 years old.

Child Life Policy. The only advantage of getting a life insurance for the kid is that he/she will not be having exclusion from any pre-existing illness from the policy. Normally I also don’t recommended parents to get a whole life paying policies for their child. If the budget allows, I would suggest a limited paying term (whole life coverage) plan for them because it will be cheaper and have higher coverage compared to similar policies sold at a later age.  

Do not rush to buy a high coverage insurance plan for your kids because that is not the top priority for parents. However, the parent itself will need to have enough coverage so that the family will not be in financial turmoil should something happen to the breadwinner. It is good to plan ahead and it is also important to find someone that cares for your interest. Do drop me an email if you like to find out how much do you need to protect adequately for your family.