Cover for babies and kids: A primer

THE purchase of an insurance product for your child may well be one of the first financial decisions a parent is confronted with - sometimes well before your child is born.

The good news is there is a wealth of choices for child health-related insurance, ranging from pre-natal cover for expectant mums to critical illness cover for not just the primary policyholder but also for his or her children.

The caveat, as always, is that you have to read the fine print. For some insurers, a waiting period may apply. There are typically caps on the child cover, and exclusions may also apply such as pre-existing conditions. Child cover may also be in the form of riders, which means you will need to purchase a base plan.

The strongest argument in favour of buying insurance for children is that their health is good at a young age, and you lock in their insurability. For traditional insurance such as whole life plans, buying insurance at a young age means premiums are lower and stay level for the premium term that you choose. For critical illness (CI) plans, premiums are typically not guaranteed and may rise depending on the insurer's experience.

Christopher Tan, chief executive of Providend, says it's important to prioritise your needs. The first priority, he says, is to cover the need for income replacement for parents in the event of death, disability or CI.

Second is to buy an Integrated Shield (IP) plan for the whole family.

If you still have the budget, you can consider a standalone maternity insurance plan, such as one offered by Income or Great Eastern. You could also go for a bundled plan (maternity cover plus option to take up a whole life par or investment-linked plan) if you are concerned about insurability for your child.

Mr Tan says: "Parents are also concerned with the cost of caring for a newborn in the event that the child is born with congenital diseases. However, across the insurers, the maximum payout is S$5,000. So the coverage is very limited.

"Furthermore, most insurers require you to bundle with an endowment/WL or ILP plan before you can buy these kind of plans. This adds to the premium cost and one may be buying insurances that one does not need.''

Thus, the first healthcare plan to consider for children would be an IP plan. Babies who are Singapore citizens are automatically covered by Medishield Life for life, including those with congenital and neonatal conditions. IP plans are hospital and surgical plans offered by private insurers, which supplement Medishield Life. An IP plan's premiums for children are typically level from age one to 20, making them relatively affordable. This article, however, does not focus on IP plans, but on other health schemes with a child benefit.

There are broadly a few types of health schemes for children. One is prenatal cover; some plans start from the 13th week of pregnancy and others later, from the 18th week. Such plans cover pregnancy complications and congenital illnesses for the child. Coverage period for the child may be up to the third or the sixth year. For some insurers the plan is standalone and needs just a single premium. For others it is designed as a rider and/or bundled with a longer term policy that may eventually be transferred to cover the child.

A second type is a critical illness plan that throws in free cover for children, which may be capped at S$5,000 or S$10,000. Great Eastern recently launched the "Great Family Care'' to cover three generations - the main policyholder, his or her children and ageing parents.

Here are highlights of some plans in the market.

Great Eastern Great Family Care; Flexi Maternity Cover

The Great Family Care plan is a standalone CI plan launched last month and sets out to help address the financial pressures faced by the "sandwich'' generation who have to care for children and ageing parents. The main policyholder gets cover for 53 CIs, death, total permanent disability, and terminal illness. Children, including those born in the future, get free cover (Child Protect) of 25 per cent of the policy's sum assured (capped at S$50,000) against 53 CIs and 25 juvenile conditions at no extra cost.

Parents may be added to the policy via a rider to cover till age 100 for major cancers, Alzheimer's disease and/or severe dementia, and Parkinson's disease.

A 35-year-old male non-smoker will pay S$807 annually for S$100,000 cover. The Parent Protect rider (pre-fixed sum assured of S$15,000) costs S$398.

Some of the fine print to note include the caps on the child and parent cover. The Parent Protect rider is capped at 15 per cent of sum assured or S$15,000 whichever is higher, up to a maximum of S$50,000. For Child Protect, the cap is 25 per cent of sum assured to maximum amount of S$50,000 per parent.

The policy covers late stage CI. For Child Protect and Parent Protect, no claim is payable in the first policy year. There is a 50 per cent lien in the second year; that is - only 50 per cent of the sum assured is payable.

GE also has a standalone prenatal cover called Flexi Maternity Cover from the 13th week of pregnancy, with a choice of S$5,000 or S$10,000 benefit for pregnancy complications, among others. It comes with an option to take up a whole life or investment linked plan for the baby within 90 days of birth without underwriting.

AIA baby and child riders

AIA's Mum2Baby Protect package comprises a whole life participating plan and a prenatal rider which covers against pregnancy complications and congenital illnesses. The par plan and all applicable riders can be transferred to the child within 60 days from birth with no medical questions asked. AIA says it is the first in the market to allow transfer of early and intermediate CI cover.

AIA's riders are interesting. For instance, the Child Critical Cover is the first to cover developmental conditions such as autism, dyslexia and attention deficit hyperactivity disorder (ADHD). ADHD is the top mental health condition diagnosed among 6 to 19-year-olds in Singapore. A cap applies to the payout for these conditions.

Another rider, the AIA Baby Protector, covers IVF pregnancies or assisted conception, a first in the market as well. Most insurers specifically exclude IVF pregnancies.

Income Maternity 360

This is a straightforward standalone prenatal policy from Income, which can be taken up from the 13th week of pregnancy. A 30-year-old mum will pay a single premium of S$390.55 for a sum assured of S$5,000; the plan is valid for three years. It covers congenital illnesses and death, and includes outpatient phototherapy benefit due to neonatal jaundice. There is also a hospital care benefit for mother and child, subject to caps.

Prudential PRUfirst gift

This is a bundle comprising a prenatal plan (for mums between 18 and 32 weeks of pregnancy; sum assured at S$5,000) and a whole life investment-linked policy which is transferred to the child upon birth.

Benefits such as hospital care are subject to caps. The congenital illness benefit must be diagnosed within two years from the date of delivery of the child.

Exclusions apply, such as pre-existing conditions including deliberate acts such as taking liquor or drugs and conception via IVF, as well as illness or hospitalisation arising from complications of fertility treatments.

Prudential needs to be informed of the birth of the child within 60 days of the date of birth, in order for the protection account to be valid.

AXA Family Advantage

This package starts from prenatal cover under the MumCare/MumCare Plus, which offers cover from 16 weeks of pregnancy for 10 pregnancy complications and 18 congenital illnesses. Depending on the option chosen, the cover may be for three or six years. This may be bundled with more comprehensive plans for death and critical illness protection, for instance, or for long term savings. Separately, AXA also has critical illness plans - the CritiCare for Him or Her - where a child can receive free cover of $5,000 for a critical illness diagnosis.

Manulife

Manulife has policies that throw in free CI coverage for child. The Ready CompleteCare CI plan for instance pays a lump sum subject to limits, for a child younger than 18 at time of diagnosis of an advanced stage CI. Policyholders of the LifeReady whole life plan with Early Critical Care Rider will have the CI benefit extended to a child.