It’s every parent’s instinct to protect their child. We can’t help it. It’s human nature. How we go about doing this, though, can’t always depend on instincts alone. Careful planning and smart decisions are needed to make sure that not only are our children protected and cared for from Day One, their futures are secure as well.

One way to do this is to look into insurance for your child. Here’re the whys, whats and costs of insurance plans in Singapore for your little one. When we’re through, you’ll have all you need to make educated choices for your family.

Is buying child insurance really that important?

You might be wondering why there’s even a need to buy insurance for your kid, considering she’s perfectly healthy and has no major illnesses. In fact, her tender age and health makes this the best time to buy insurance.

First, children qualify for full insurance coverage without exclusions. Insurers don’t cover ailments or conditions you have before you buy their plans. Since your kid (most likely) has absolutely no history of illnesses, getting full coverage is easy. Then, should any medical condition develop in the future, she will be covered.

Second, premiums will be very cheap because children with clean bills of health are considered low risk cases from the insurer’s point of view. From here, insurance premiums can only go up.

You might also want to incorporate insurance as part of your financial planning for your child’s future at this stage. Beyond just for bad situations like illness or death, an endowment plan can help save for a future need like education or a major life event.

Prenatal insurance (for mothers and unborn babies)

Yes, you can actually get insurance while pregnant! Prenatal insurance, also known as pregnancy or maternity insurance, insures the mother and her unborn child throughout the pregnancy up to the birth, and even after.

Typically it covers a range of pregnancy complications such as abruptio placentae, amniotic fluid embolism, fatty liver of pregnancy, postpartum haemorrhage, and including death (touch wood).

For baby, prenatal insurance covers congenital illnesses (e.g. cerebral palsy, Down’s syndrome, and spina bifida) and hospitalisation in the ICU or high dependency unit. Some insurers cover the child till age three.

The one-time payout (usually cash of up to $10,000) and coverage of hospitalisation bills (up to $200 a day) can go some way to defraying additional costs when complications or illnesses arise.

If you want coverage for standard pregnancies, regular checks and routine births as well, you’ll have to turn to international insurers like RHI (Bupa) WHO.

When can you buy prenatal insurance?

For most prenatal insurance, you have to buy the policy at least 10 months before getting pregnant (how’s that for family planning?).

READ ALSO: What happens if you lie about your medical history when buying critical illnesses insurance in Singapore?

Payouts for such types of insurance tend to be very high. To collect premiums for a reasonable amount of time, insurers usually institute a waiting period before you can collect on your plan, hence the 10 months.

If you’re pregnant, you can still get prenatal insurance, but after your first trimester. Some insurers allow it as early as at week 13 of your pregnancy.

Why buy prenatal insurance?

Complications and congenital diseases can greatly up your medical bills and MediSave or MediShield Life alone may not be enough. With prenatal insurance, at least money would be the least of your worries when problems crop up.

Another plus is that you can usually convert your prenatal policy into life insurance for your child. The premium rates are better.

But, more importantly, such conversions usually don’t require medical underwriting. That means that even if your newborn has any health conditions, he will still be insured.

How much does prenatal insurance cost?

Let’s take a look at some prenatal insurance options in Singapore. Generally premiums are one-time only and start from just $300-odd.

Health insurance for your child

Just like regular adult health insurance, this is insurance that covers medical costs such as hospitalisation, surgery, and treatment for chronic or critical illnesses and accidents. These are the major types of health insurance to consider for your child:

Hospitalisation and Surgery (H&S): If your child is a Singaporean, he would already have a H&S plan in the form of MediShield Life. But MediShield Life isn’t enough to cover public Class A wards, or private hospitals. Sometimes, we want better for a sick or injured child. If that’s the case, you need to buy a private integrated shield plan to add to your child’s MediShield Life. This can be paid for by your MediSave.

Critical Illness: This policy pays you a lump sum when a critical illness is diagnosed, even if there is no hospitalisation or treatment. An illness is considered critical if it’s in stage three or four (advance stage where recovery is less likely). The money can be useful to help pay for treatment.

READ ALSO: Do you really need critical illness insurance? Here are 4 reasons why you probably do

Personal Accident (PA): Kids can get into all sorts of scrapes, injuring themselves or worse. This insurance helps cover the cost of putting your kid back together again.

Why buy health insurance for your child?

Kids are prone to illnesses and accidents and there is no guarantee that young ones can’t develop major illnesses.

In the event that your kid ends up in hospital, MediSave can pay for your child’s medical costs but it has its limits ($450 a day for hospitalisation and up to $300 a day for hospital charges for surgery). Health insurance can help plug the gap.

As mentioned earlier, childhood is a great time to get health insurance as premiums will be cheap. If that isn’t enough, you can also use MediSave to pay the premium on your child insurance, so you won’t even have out-of-pocket expenses.

How much does child insurance cost?

Annual premiums for kid health insurance can vary largely from company to company. Also bear in mind that the policies don’t all cover the same things. For example, some only cover hospitalisation while some let you claim many other medical expenses.

Insurance policy	Annual premium	Coverage
Prudential PRUShield	from $186	No age specified. Covers hospitalisation, including pre- and post-hospitalisation
AXA Prime Care	from $60.35	1 month to 17 years old, subsequently renewable until age 85. Lump sum benefits, hospitalisation allowance, no claim discount
AIA Star Protector Plus	$149.62 to $479.72($57.60 to $192 optional add-on to cover critical illness)	2 weeks to 16 years old. Covers 16 common illnesses + option to add on critical illness benefit
Great Junior Protector	$238.68 to $421.56	15 days to 16 years old. Covers common illnesses, accidents and hospital cash benefits

Life insurance for your child

Life insurance pays a lump sum when the person insured passes away or suffers permanent disability. It’s especially important if you’re the sole breadwinner, have people depending on you financially or debts. For adults, you’d choose between term or whole life insurance.

Term insurance is cheaper and offers coverage for a period of X years. After that period ends and nothing happens, you get nothing except the chance to thank your good fortune.

Then, your child will have to buy a new plan. But if, by then, he has health issues, his new plan won’t cover him because they would be considered pre-existing conditions.

Whole life insurance has higher premiums, but it offers coverage for life so your child won’t have to look for another policy in the future. Payouts will be given to the beneficiaries of your child when he passes away.

Often, there is a small savings component built into the plan that grow over time as well.

Why buy life insurance for your kid?

Unlike most types of insurance which cause our eyes to glaze over immediately, life insurance for kids has actually sparked debates.

For one thing, life insurance is usually to replace the income of the person who has passed on. Since kids make nothing (in fact they cost a lot), there doesn’t seem to be any real need for it.

However, kids are more insurable and enjoy lower premiums, so buying whole life insurance early affords them greater protection and saves them money eventually. You won’t have to worry about his coverage lapsing at the end of the term.

Some parents also like the savings component as it’s a form of savings for your child that can go towards his funeral expenses, morbid as the thought may be.

How much does whole life insurance cost?

Here’s a comparison of several popular whole life insurance plans in Singapore. Compared to health insurance for your child, the premiums are a lot higher, which may have you thinking if you really do need to purchase a life insurance plan for your kid.

Don’t forget that you’ll be passing this annual commitment to your child when he comes of age as well (though at that point, the premium might be a lot cheaper than that of his peers).

Insurance policy	Annual premium	Coverage
Manulife LifeReady Plus (II)	$1,690.07 to $1,974	Covers death, terminal illness, total permanent disability
Aviva MyWholeLife Plan IV	$1,715.25	Covers death, terminal illness
NTUC Star Secure	About $2,400	Covers death, total permanent disability, terminal illness
AXA Life Treasure II	from $660.50	Covers death, terminal illness, total permanent disability

Endowment plans and education savings policies

Another type of insurance you might want to consider buying for your kid is an endowment plan. It’s actually a subset of life insurance and pays out a lump sum after a specified period.

Now there’s also a type of endowment plan called an education savings policy. It spreads the payout over the university years of a child, instead of providing a lump sum when the policy matures.

Why buy an endowment plan/education savings policy?

Education in Singapore is generally not that expensive, unless you count tuition or enrichment classes.

But university fees in Singapore can be quite hefty, even at a local university. Currently a university course typically costs upwards of $30,000.

If your child is gunning to be a doctor, set aside about $130,000. If it’s a foreign education you’re thinking of, the figure goes up to more than $200,000, give or take a couple of thousands depending on where that foreign university is.

And these are 2022 figures. Obviously, expect them to go up when your child comes of age.

So that’s why it’s important to put aside money for your child’s education and to do it as soon as possible. If you have more than one child, the need increases.

While endowment plans are seemingly a safe way to build up that uni fund, don’t forget that there are a myriad other ways to invest. With an endowment plan, there’s always a tiny risk of losing your principal or not getting 100 per cent of the 'projected' returns.

How much does an education savings policy cost?

Like whole life insurance, these policies aren’t cheap. But the payouts are usually scheduled, so at least you have some idea of when your kid will see the money.

Insurance policy	Annual premium	Payout structure
AXA Savvy Saver	from $1,200	Pays a stream of guaranteed yearly cash benefits starting from the end of second policy year. Lump sum payout at maturity
AIA Smart Growth II	about $5,315	Pay premiums for 10 years for a policy that lasts between 20 and 30 years

Conclusion: how much can you afford?

Now let’s put it all together. Putting aside the issue of prenatal insurance (since it’s only a one-time payment), here’s an estimate of how much the different types of child insurance will cost:

Type of child insurance	Lowest premium	Highest premium
Health insurance	$60.35 (a year)	$479.72 (a year)
Life insurance	$660.50 (a year)	$2,400 (a year)
Endowment / education savings plan	About $100/month	About $200/month
Total	About $160/month	About $440/month

If you look at the low end of the premiums, you can buy your child the entire suite of insurance policies for a little over $160/month.

The question is: Are they all necessary? Of the lot, life insurance is probably the one you could hold off.

A life insurance replicates quite a bit of what a health insurance offers, and it doesn’t have the cash payout that can be used while your child is alive like what an education endowment plan has.

Also, unlike health insurance, you can’t use your MediSave to pay your child’s life insurance so you’d have to fork out cash.

Minus the life insurance premium, what you’d actually pay is closer to $150/month. That’s about the price of a daily Starbucks drink. For that, you can ensure your child is well-cared and provided for even if the unthinkable happens.

READ ALSO: Life insurance in Singapore: The basics of whole life and term insurance

This article was first published in MoneySmart.