Let's face it, who doesn't love kids running around and both parents smiling and laughing over these little bundles of joy?
From the time they are born till they reach 21 years old, we as parents will have the moral responsibility of giving them the best that we could so that they can grow up in an environment that is safe and conducive for learning. Hence, we have to think about the possible scenarios that may cause disruptions in their growing-up years and put in place preventive measures to minimise these incidents from happening and reduce any possible impact.
One of the most common disruptions caused would be a loss of income. As the standard of living increases, parents are finding childcare and education costs rising at an increasing speed. In the event of an accident or to a greater extent, death, children will have a hard time trying to make ends meet, especially so if they are still in their adolescent years.
How do you expect your spouse to raise the children without financial support, let alone leaving your children all by themselves if both parents were to meet with an unfortunate incident? These are some of the questions that we might not want to ask, but are critical in our family planning process.
We have to plan ahead and ensure that these disruptions will not change our plans for the children. While we cannot prevent an accident from happening or total permanent disability causing an inability to continue working and supporting the family, we can get ourselves insured and if anything unfortunate were to happen, we know that the children can still continue with their education and growing up years without any disruptions. Although the emotional pain of losing loved ones will be painful, at least the children do not have to worry about how their finances.
TERM OR WHOLE LIFE INSURANCE?
A whole life or term plan would be suitable for families who have just started their journey as parents with newborn children. Both products are designed to protect against death, terminal illnesses and up to a certain age, total and permanent disability. As parents, we will be working hard to provide a conducive environment for learning and growing but being responsible will involve getting ourselves insured against unfortunate incidents. These plans could include riders which will help to waive off the premiums of the main policy if any of the insured events were to happen. Hence, the financial burden will not fall on the spouse or the children.
Term plans are affordable because they are 'non-par' plans which means they do not have cash values or bonuses when the plan terminates. You are buying for protection and the sum assured will be paid without any bonuses so it is a straightforward plan that is easy to understand. They have flexible premium paying terms to suit your needs so you do not need to worry about missing out payments which leads to the termination of a policy.
Whole life plans are similar to term plans but they have revisionary bonuses and once declared on a yearly basis, they are guaranteed. Thus, this will increase the sum assured and your dependents will receive a higher payout. As a result, the premiums are more expensive than term plans, but the coverage is for life.
Term insurance plans are generally favoured to whole life plans, if for the same premium paid, you wish to go for a higher sum assured and coverage for your dependents. If you are also comfortable investing on your own, buying a term plan and investing the rest of your money into a diversified portfolio made up of investment products such as funds and bonds can also be a good way to make your money work harder.
At Insurance@FSM, we have onboard a list of term insurance products available from different insurers. Please feel free to look through the different product factsheets and if you have any questions, you can always approach our friendly team of Investment Advisers for a more detailed discussion subsequently.