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.
May 22nd, 2008 at 3:13 pm
I would say…. buying insurance for your children is not a bad move… though HMO should be the most appropriate at this time…
October 19th, 2007 at 12:01 am
Hi Emy!
I may be able to help u using a simple tool i got from the Registered Financial Planners course when i took it last year. It’s a flowchart that helps one to choose between term & cash value policies.
My email ad is angievilvar@yahoo.com or u may ask salve my contact #s.
Hi Salve!
Its been several days since i last visited money smarts, even b4 my last email 2 u. Havent even had time yet to reply to oda re bonds/bond funds. Hav been very,very busy on some corporate retirement accts. I hope to b able to read all ur articles/blogs here in MS…ito pa nga lang nababasa ko. More power always!
October 18th, 2007 at 5:31 am
Insurance for kids is ok if the parents are super rich. They won’t lose anything and they as a family will gain something if they decided to get insurance for their kids.
October 17th, 2007 at 8:51 pm
talking about an established insurance company: you mean stability? the top three insurance companies in the country based on all terms, ie. assets, profits, etc.; or you mean financial strength, then you ask the Insurance Commission. the oldest does not mean the best though. the purpose of insurance is to counter the risks of the unforeseen. to grow your money for future use, go to investment houses like PAMI. To safekeep your money without depreciating its value due to inflation, then buy government bonds. everything has a purpose under heaven.
October 17th, 2007 at 4:08 pm
I am seeking an advice, I’m 44 years old, have 4 children (ages 17, 11, & 5.5yrs. old (twins). I’m planning to buy an insurance plan (hope it’s not yet too late!) but couldn’t decide which is suitable and which will give more benefits to my children in case me or my husband leave them. Kindly advice which is better, whole life term or educational plan for my twins? Can you please suggest also an established insurance company.
I found your column educational & very interesting especially for us parents. Can I expect a reply from you? Thanks!