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Should I Buy Insurance Plan for My Kid?

Should I buy an insurance plan for my kid? I had been asking myself this question since I gave birth to my son in 2016.

Finally, in 2020, I took up an investment-linked plan for my 4-year-old toddler. The plan emphasized medical coverage with a monthly premium of RM191. I shared the whole process in another post: How I chose the best medical insurance plan for my son.

For this post, I will be sharing my thought as a mum about how I overcame the thought ‘should I buy an insurance plan for my kid?’.

Table of Contents

[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]

Should I buy an insurance plan for my kid?

When I was still under employment up to mid of 2018, I somehow put behind the thought of getting insurance coverage for my son. Because my then employer provides group insurance coverage as part of the employee benefits.

I remember parts of the group insurance coverage included the following:

  • group hospitalization and surgical plan
  • out-patient and specialist care
  • term life benefits

And yes, the coverage extends to my immediate family members – my husband and my son.

So, I use that employer’s free insurance coverage as an excuse to delay my insurance purchase for my son, with the hope that I can save on the insurance premium.

Probably, I was too busy juggling full-time employment and being a mum to my baby. Another excuse was I don’t have sufficient time to research kids’ insurance needs.

After all, both my husband and I have our own insurance plan.

Sleepless nights and feeling insecure

In July 2018, I resigned from my full-time employment. That also means my son no longer enjoys free insurance coverage. From this experience, I’ve also learned that it is never a good idea to fully depend on employer group insurance coverage.

It’s just too risky.

Sometimes at night, while my son was sound asleep in his crib, I couldn’t sleep. Because there is this feeling of being insecure about not getting an insurance plan for him.

Hundreds of questions started to pop out of my worried mind:

“What if something unfortunate happens to my son and we were not prepared for it?”

“What if something unfortunate happens to me or hubby?”

“Do we have sufficient savings in case of long-term medical care?”

“Can we rely on the government hospital?”

“Should I get insurance coverage for my son as soon as possible?”

Then, one evening when my son complained of stomach discomfort, I got really worried. I think I overreacted. Yes, the thought of not having coverage made me overreact. That incident decided to get a medical plan for my son to become a top priority.

Instead of getting over-worried and overwhelming myself with hundreds of questions, I started to list down the reasons for me to get an insurance plan for my son.

7 reasons I bought an insurance plan for my son

After some quiet time, I listed down the reasons why I should get an insurance plan for my son.

1. As an alternative for medical or emergency needs

I know our government provides a quite comprehensive health and medical needs with just RM1 or RM5 for specialist services through government hospitals and clinics.

I personally experienced the comprehensive and yet very affordable healthcare by the local government hospital in Kuching, Sarawak General Hospital (SGH) when:

From the above experience, I must say I am impressed by the superb services provided by SGH.

But, I must also admit that I am quite concerned with the following during my stay at SGH:

  • urgency and speed of admission
  • the escalation level of procedure
  • patient comfort level

I never blame the government hospital because I understand they need to take care of so many patients. Thus, emergency cases will be their top priority. Less urgent cases will need to wait.

The waiting part can be quite painful.

Thus, having medical insurance gives us an alternative to the government hospital by offering the below:

  • prompt service with less escalation level
  • better patient comfort level

In other words, I have other options just in case there are health and medical needs.

And from my extensive reading on medical plan, I found out that the medical plan attached to an insurance plan such as investment linked-plan suit our needs best.

2. To ease the financial burden during a difficult time

No one wants to get sick. But the hard truth is life comes with uncertainties. I can’t control these uncertainties but I know while I can, I need to find ways to at least be prepared just in case something happened.

I’ve read the news about parents being forced to sell their homes to support their child’s medical needs.

As a parent, I understand why they decided to make such a decision: Life is more precious than property. You can find and buy a new property but not a new life.

From my reading, the right insurance plan should be able to:

  • reduced financial worries if admitted to the hospital
  • provide some level of financial support in case of critical illness or accidents

In other words, it helps to spread the financial risk by transferring the risks to the insurer.

Although my son’s existing investment-linked plan has minimal coverage for critical illness and accidents, at least there’s a fund just in case something happens.

As for the minimal coverage, we can choose to increase the coverage whenever we feel comfortable doing so.

3. Financial support if unfortunate things happened to me or my husband

Some might say I overthink. Or I worry too much and too far. But I have strong reasons for that:

  • We are not wealthy
  • We started a family at an advanced age due to a long infertility journey
  • He’s our only son

Now that we can walk and jump and work to earn a living. But, as the days pass, we are also getting older. This means our health and overall well-being are at higher risk.

If something happens to either me or my husband, I want to make sure that my son has sufficient insurance coverage until he can support himself. Especially for medical insurance.

In case something happens to both of us, at least my son will not trouble his guardian on the insurance part.

That’s why I opted for a double payor rider for my son’s insurance plan.

4. To ensure my son gets coverage early

When a person is doing fine, he will not want to think about insurance. Only when he is not ok, then he starts to think “Oh! I should have got myself an insurance plan earlier!”.

Sadly, insurance companies only want to give protection to those who are healthy during enrolment. Why? Because insurance providers won’t be able to survive if most of their clients belong to the high-risk group.

Furthermore, it is unfair to other clients who had contributed to the pool of funds much earlier.

That’s why there’s a waiting period when a policyholder signs up for an insurance plan.

For my son, I want to ensure he’s covered early. So that he’s eligible for the insurance plan and its riders as we planned.

5. To lock in an affordable insurance premium

Healthcare cost is skyrocketing. And I foresee it will keep rising.

When I had appendicitis while 4-months pregnant with my son in early 2016, my specialist told me that I would need to fork out around RM6,000 if I choose to go to private hospitals (most probably my medical card does not provide coverage due to pregnancy).

In another example, a doctor shared on The Star Online that it is not uncommon for appendicectomy to cost between RM20,000 to RM30,000 in Kuala Lumpur in 2017.

In five or ten years, there are possibilities an appendicectomy might need RM50,000.

When healthcare cost is skyrocketing, so does the insurance premium.

Therefore, I decided to take up an insurance plan with sufficient medical coverage as early as possible. By signing up early, I hope to lock in a lower insurance premium for my son.

6. Longer time frame to build cash value

I am well aware of the Buy Term Invest the Rest thing. But, personal finance is all about getting the best for my personal needs.

Thus, I opted for an investment-linked plan for my son with a minimal monthly investment amount. Although it is a small amount, I trust it can grow into an amount that can cover the increase in insurance premiums which most likely will happen in the future.

By signing up early, the insurance plan has a longer time frame to build cash value.

7. I want peace of mind

Lastly, having an insurance plan for my son gives me peace of mind.

This means I can finally sleep well at night without asking myself ‘should I buy an insurance plan for my kid?’.

Perhaps I feel at ease because I know there’s a plan ready to protect parts of my son’s financial needs.

If you asked me if I feel pain paying my son’s monthly premium of RM191, the answer is ‘Yes”. But, I would rather choose to be financially painful instead of feeling insecure and guilty if I didn’t get an insurance plan for my son.

From time to time, as the insurance industry grows and adapts to the needs of the people, I trust there’ll be better and more affordable insurance plans for kids.

By then, I might switch to a better policy with a lower premium.

Final thoughts

Buying an insurance plan for young children can be a tough decision.

As parents, I believe we all want to give the best protection to our kids. At the same time, we might be asking ourselves, should I buy an insurance plan for my kids? Do they need insurance coverage?

The above is my sharing of my decision to get an insurance plan for my toddler son. I always believe every family is unique.

Should you buy an insurance plan for your kid? What do you think? I would love to know. Do leave a comment below.

Image Credits

Featured image by Gerd Altmann from Pixabay

2 thoughts on “Should I Buy Insurance Plan for My Kid?”

  1. Thanks for sharing openly your thought process & decision making! My 2 cents that as your child is a dependent and may likely want to change/carry own policy as an adult, a standalone/term medical insurance would suffice & you’d save about 50% in premiums.

    Ps. Just got a medical policy for my little one too about a month after he was born

    1. Hi Stev,

      Great to see you here and thank you for your comment.

      Yes, I am aware of the ‘about 50% savings in premiums’ for standalone or term medical insurance. I’ve got the quotations for the standalone medical plan before I made the final decision. Due to the benefits and other considerations, the investment-linked plan (ILP) fits our current needs best.

      But, as standalone or term medical insurance package changes form time to time to adapt to the people’s needs and to capture a bigger slice of the medical insurance cake, there’re possibilities for us to switch to a standalone or term medical insurance plan.

      If you have any great standalone or term medical insurance, do buzz me ya 🙂

      And great to know you’ve got your son covered early for the medical plan.

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