A parent's love usually turns into the question, "what insurance should I get for my child?" But the right answer may run against instinct, because the most important first policy for a child may not be a policy with the child's name on it at all. Let's work through the order.
First principle: the biggest risk to a child is something happening to the parents
It sounds odd, but it is true. The income raising a child comes entirely from the parents. If the main earner dies or becomes disabled, the child's life is affected more severely than by anything else. So before buying insurance for the child, check whether the parents' life cover is enough for the long-term cost of raising them. If not, the first slice of the budget belongs there. It is the invisible gift, and the most valuable one a child can be given.
Next: the child's health insurance
Young children are ill often, as a natural consequence of a developing immune system, and private hospital treatment can run into the tens of thousands per episode. Children's health insurance lets parents decide to take them for treatment without weighing up the money. Things to know: premiums for young children are usually higher than at other ages because of the claims frequency, and there are specific conditions — waiting periods, exclusions for pre-existing conditions, and in some plans a requirement that a parent be insured alongside. Read all the conditions before choosing.
Add accident cover once they start climbing
The kindergarten and primary years are the climbing years. Personal accident (PA) cover for children is inexpensive and covers treatment for falls, fractures and animal bites — the everyday events of that age. Some schools already provide group accident cover, so check what exists before buying more, to avoid unnecessary duplication.
Education funding: a goal with several possible tools
A lump sum for education can be built with an endowment policy that returns money exactly as university begins, giving certainty under the policy conditions, or with long-term investment, which has more growth potential but is volatile. Which suits depends on each family's financial temperament. One important recommendation: if you choose an education-focused policy, look for one with a waiver of premium benefit should the parent paying the premiums die or become disabled — so the child's education plan continues even if something happens to the person funding it.
Mistakes parents often make
- Buying a large life sum insured for a young child, who has no income to replace. High life cover belongs with the parents.
- Buying out of affection because a relative or acquaintance suggested it, without checking whether it duplicates existing benefits.
- Setting the premium so high it strains the household, affecting the family's reserves. A good plan has to survive a year when income falters.
- Forgetting to review. Insurance bought when a child was two may not answer the need at twelve. Review at each stage of their life.
In short: the recommended order
One, always check the parents' cover first. Two, health insurance for the child within an affordable budget. Three, add accident cover once they reach the boisterous years. Four, plan education funding with the tool that suits your family. Follow that order and every baht of love works at full efficiency. If you would like help reviewing your family's order, message us on LINE any time.
This article was inspired by material from the Thai Financial Planners Association (TFPA) and has been entirely rewritten.