Insurance for children are cheap, sure but in this case, “cheap” doesn’t equate to “good buy.”
The reason is simple. Children don’t need insurance. Our personal finance feature for today says:
Children do not need life insurance. You are not dependent on your child for your income. If your child passes away, you can still continue to work and earn, and life will still go on for you.
Read the entire article here.
Use that extra cash instead to increase your coverage. What’s important is for PARENTS to get the right coverage. I daresay most Filipinos are underinsured.
We get a little bit of comfort in that insurance policy tucked inside our filing system at home. (Hmm. Wait. Where is that policy? Our loved ones should know where it is kept or better yet should have a certified true copy.) But insurance coverage should be revisited from time to time especially upon the birth of a new child.
Next question would be: how much insurance do you need?
There are many rules of thumb, some of which are, to me, extremely ridiculous, like the one that says it should be enough to pay out up to 10 years worth of your income. You’d be living like the dead now to pay your insurance company so that your beneficiaries can live like royalty when you die.
I like Noet’s way – computing backwards. Find out how much spouse and kids need to bury me (ouch) and sustain a comfortable lifestyle for two to three years. Since he’s the one that pays for our every whim, the pressure to get a high coverage is not really that big. Hehe.
Still, even housewives need to buy insurance because childcare and homecare is costly. But buying insurance for kids? No thanks.
October 17th, 2007 at 2:33 pm
I just got an insurance for my only son..I think i had the right decision i am sick. As a single mom. i must secure the future of my son.
October 17th, 2007 at 1:20 pm
Money Smarts » Insurance for kids…
Children do not need life insurance. You are not dependent on your child for your income. If your child passes away, you can still continue to work and earn, and life will still go on for you….
October 17th, 2007 at 11:01 am
[...] Money Smarts : Insurance for kids [...]
October 17th, 2007 at 10:56 am
you better save that money you intend to buy for the insurance policy. insurance companies here in our country are not that reliable compared to the other countries. you may also save the money in an account named after your child.
October 17th, 2007 at 9:34 am
my parents bought life insurance (endowment) for me when i’m still a kid. it seems that, like some, they saw insurance as an investment vehicle. or maybe that’s how some insurance policies are marketed. can’t blame them.
not that i’m ungrateful but now that i look back, i think it would have been better had they increased their coverage instead. if something had happened to them back then, for sure we are inadequately insured. or, they could have invested in a mutual fund for better returns. what they wanted was for investment anyway. but i guess other retail investments such as mutual funds are totally unknown then. sayang wala pang money smarts noon.