Thinking about what kind of insurance your newborn needs (if at all)? We give you a breakdown of the common types of insurance to consider for your baby, some advantages of getting policies early, plus a few plans to consider.
To some parents, getting insurance for their newborn is natural and expected. To others, the mere suggestion may elicit a response that goes something like “why do babies need insurance?”
That is a good question. Here are the four most common types of insurance people are buying for their newborns (and why):
- Health insurance (Integrated Shield plans) – To complement MediShield Life coverage for a higher quality of care.
- Critical illness insurance – To compensate for loss of income should one or both parents be forced to take time off work to care for their sick child.
- Personal accident insurance – To cover outpatient treatments and other “miscellaneous” medical expenses.
- Whole life insurance – As a “forced savings” plan to be able to pass on cash value to their child plus give them coverage for the rest of their lives.
3 advantages to covering your newborn earlier rather than later
Now, we cannot say whether getting these types of insurance for their newborn might be the best move for you. Each family’s financial situation is different and so is their investment philosophy (for instance, there are those who consider whole life insurance to be a subpar method of savings/investment).
But the list above should give you at least a sense for why some parents would elect to get such insurance for their baby. And while it’s true that all these insurance types can be purchased later in a child’s life, there are advantages to purchasing these policies early – three of them in fact. They are:
1: No pre-existing conditions
Most babies are born perfectly healthy, which means there are no pre-existing conditions which would then become policy exclusions. Covering them early thus provides maximum coverage from an illness perspective.
2: Lower premiums
The younger you begin policy coverage, generally the lower premiums you pay (especially if there are no pre-existing conditions). For medical insurance, you can also use your MediSave funds to buy an Integrated Shield plan for each child.
Most babies are born perfectly healthy, which means there are no pre-existing conditions which would then become policy exclusions. Covering them early thus provides maximum coverage from an illness perspective.
2: Lower premiums
The younger you begin policy coverage, generally the lower premiums you pay (especially if there are no pre-existing conditions). For medical insurance, you can also use your MediSave funds to buy an Integrated Shield plan for each child.
And if you opt for whole life insurance, many such policies have a limited pay term, after which the policy owner will be protected for life. Buying this policy young – and getting lower premiums in the beginning – could save you thousands of dollars in premiums over the term.
3: Peace of mind
Don’t underestimate the importance of obtaining peace of mind. Raising a family can be a stressful experience. Knowing that your downside financial risk is limited by insurance can go a long way toward alleviating some of that stress.
3: Peace of mind
Don’t underestimate the importance of obtaining peace of mind. Raising a family can be a stressful experience. Knowing that your downside financial risk is limited by insurance can go a long way toward alleviating some of that stress.
Insurance policies for your newborn: What to consider buying
We’ve looked at the common types of insurance people typically buy for their newborns and some advantages of starting early. Now, here are our top insurance plan picks for each of the above categories.
Keep in mind that many of these have overlapping benefits, which means that it might not make sense for even the most devoted parents to purchase all four types of insurances for their child – no matter how precious.
