baby insurance... investing for the future

Are you perplexed by the range of financial solutions out there for baby? Let me clarify and breakdown the insurance plans for you.

1) Medical Insurance
Basically there are two types of medical insurance. The basic one which is payable by cpf medisave covers major illnesses and hospitalisation but usually there is a co-pay or termed as deductible that you still need to fork out. Some insurance companies will offer a comprehensive medical addition which will cover the deductible which means that if baby were to be hospitalised, you need not come up with a single cent. This plan cannot be paid by medisave. Before buying a medical insurance for baby, check with your own company which might offer you such plans at a discount due a tie-up with some insurance company. Usually the costs for such plans ranges from $100 - $200 per year.

2) Life plans
For life plans, there are many options out there including investment linked plans, term insurance and the conventional life insurance.
a) Investment linked plans typically offers you a high coverage for a smaller premium. The good thing about investment-linked plan is that if you buy during market lows as like current situation, you can break even faster and in the long run, make pretty good returns. The bad thing is, if markets are not doing well, you end up paying more charges. If you are savvy enough, this plans work better for you. Can be treated as an education plan as the returns are better than conventional endowment.
b) Term insurance is a cheap way of getting high coverage but works better for adults as there is no returns for this type of plan. So how it works best is that the parent can take up a term plan such that if anything happen to parent, the payout can be used to cater for the child upbringing. We usually get life plans as an inheritance policy for the child so they can get a sizeable amount of money when they grows up.
c) Normal conventional life insurance. There are many types right now. Most traditional you got to pay for the coverage through out your whole life, which you can get your child to take over the paying of the premium when he/she turns 21. Then there is the not-so-new plan of limited payment where you can actually pay for the entire life insurance of 100k or 150k insurance plan in just 10 or 15years. Then the latest is you can pay a lump sum of 30-40k to cover your child for up to 200k upfront. For the parent who prefer hassle-free arrangement.

3)Endowment Plan
There are the kind where you typically save an amount of money and get it back at the end of maturity, usually ranging 16-21years and there is the kind where you need to save for 20-25 years but you are allowed to do partial withdrawal from the 2nd or 3rd year onwards.

4) Accident Plan
Which you can take up a standalone plan or purchase it as a rider to the life plan.

For more queries, please drop me an email I will be glad to share with you.