The years when children are young are the most financially fragile of a family's life: the longest obligations, peak expenses, and everything depending one hundred percent on the parents' income. At the same time, the budget is at its tightest. So this article narrows it down to the three that genuinely matter, in order, for parents who want to start in the right place within a real budget. (For the full picture on insuring children, read our article on choosing insurance for your children alongside this.)
Type 1: The parents' term life insurance — the backbone of the whole plan
A fact to accept first: the greatest risk to a young child is the disappearance of the parents' income over the next twenty years. The most direct and economical tool is term cover over 20–25 years, at a sum equal to the cost of raising them plus education plus debts. An example of the method (illustrative figures): 200,000 a year to raise a child × 20 years + a 1 million education target + a 2 million mortgage = a sum insured of around 7 million. That sounds large, but with term cover for someone in their thirties the premium is usually in the low tens of thousands per year. Arrange it for both parents in proportion to income, and don't forget to attach disability cover, a comparable risk that is forgotten far more often.
Type 2: Health insurance — for the children and the parents, in the right proportion
Young children are ill often at their age, and health cover lets you take them to the doctor without hesitating over money. Choose a limit based on the hospital you actually use, and know that premiums for young children are higher than at other ages because of the claims frequency. But the mistake new parents most often make is forgetting their own health cover — when a seriously ill parent has a far larger impact on the household than a sick child (lost income + treatment costs + nobody to care for the child). The weighting principle: the parents' health cover must not be thinner than the children's. Using a deductible alongside company benefits helps control the total premium, as we have written in several articles.
Type 3: An education plan with waiver of premium — school fees that continue in any circumstances
Once the first two are in place, add the education funding plan. The instrument can be chosen to suit the family's temperament: an endowment with money returned exactly when university begins (certain under the contract), or long-term investment (more growth potential, more volatile). What makes an education plan through insurance special is the waiver of premium / payer benefit rider: if the parent paying the premiums dies or becomes disabled, the company waives all remaining premiums and the child's benefits continue in full. That is a feature no fund or ordinary savings account has, and it is the main reason education plans through insurance still have their place even when the return is unspectacular [check the conditions in the policy].
How to order the budget when money is limited
The iron rule for a household with young children: never buy type 3 before types 1 and 2 are complete. A beautiful education plan is meaningless if the main earner falls and there is no life cover behind it. The recommended budget frame is unchanged: total household premiums no more than around a tenth of family income. If all three exceed the frame, reduce the size of type 3 first — never cut type 1.
Review as the children grow
This set is not set-and-forget. Every time another child arrives, the school changes, or the mortgage falls substantially, come back and adjust the sums and the targets. Use the within-90-days review frame after a major event that we recommend. And as the children grow past dependence, the large term cover you set will gradually complete its mission by itself. That is the signal the plan has worked exactly as intended.
In short
The starter set for parents of young children: a high term sum insured on the parents as the backbone, health cover for the household in the right proportion, and an education plan with waiver of premium as the closing layer. Three types, in that order, within a sustainable budget — and love has a structure behind it in every situation. If you would like to work out your own family's numbers, message us on LINE any time — no charge.
This article was inspired by material from the Thai Financial Planners Association (TFPA) and has been entirely rewritten.