Wednesday, October 15, 2008

Insurance for infants

In the last few months, we've touched base with a couple of insurance agents, trying to see what sort of life or medical policy we should buy for Sonny.

Some folks might find it rather morbid to be talking about insuring an infant. But there's a definite logic to doing so. Most pertinently, insurance becomes increasingly expensive as we advance through life because the chances of something very serious happening to us increase over time. Which means, of course, that we are increasingly likely to slap our insurance company with a claim. AIG, AXA, Prudential and their like also take into account our prior medical history in deciding the premium (that is, the amount of money to be regularly paid to keep the policy from lapsing). If someone has what are called 'pre-existing medical conditions', these will affect either how much he pays or increase the likelihood that the company will decide it doesn't want to insure him at all. In the case of medical insurance, any such condition runs the risk of being excluded: If it sends you to hospital (or worse), not one red cent is paid out.

A baby starts off with a major advantage since he is much less likely to have any sort of adverse medical history: As a result, he's less likely to attract a stiff premium, or suffer exclusions. Once the policy takes effect, nasty surprises won't be a problem. That is, of course, unless the insurance company goes bust or there is some fine print that can be quoted and used to deny a claim. If you believe half the stuff to read on the Internet (use Mr Google liberally, but wear a bib to catch the spittle and invective that will spring from your screen), an insurance company is about as trustworthy as a car with no engine.

Having no background in finance ourselves, the best advice we've gleaned from our research is that it may be best to to opt for basic policies, with fewer bells and whistles, as a base. If you are one of those who likes having multiple policies, with an "investment-linked" component, cash bonus features and what have you, you might keep in mind that these will potentially erode your policy's subsidiary function as a form of forced, long-term savings.

Your best bet might just be asking around till you nail down an insurance agent that comes with multiple recommendations, and with whom you are comfortable discussing your options. These days, agents double up as financial advisers and will try and sell you any number of products. Those that don't seem to be trying to milk you for every spare dollar are the ones you want to give proper consideration. One last thing: Never lie about medical conditions. You can be found out - and the consequences won't be pretty.

2 Comments:

Foong said...

Hi, it is always wiser to get an insurance policy for your baby the moment he is born...this way, the company will pretty much cover everything because a newborn baby is literally born with 'clean slates'. No medical records, etc.

I made the mistake of acquiring a Great Eastern policy for my son when he was born...so when he was hospitalised about 9 months later, we had a hell of a time claiming. I had to write several nasty letters to the HQ before finally getting the claims. We also canceled all our premiums. And yes, I blogged about it too!
Now, we've changed to Prudential because after researching around and asking some hospitals, seems like Prudential is the easiest to claim, as long as it's a bona fide case.
Whatever you decide,the best plan is to get the medical plan, since what we are now most worried about most is the rising medical costs!
And no, it is not morbid to think about insuring your child. It is being practical. Children fall sick quite often as their immune system are just only developing and trust me, sometimes a mere cough could turn really serious as in my son's case. He had to be hospitalised to have the phlegm extracted (and yes, it is probably as painful as it sounded).
Good luck in your search!

Cloudsters said...

Thanks, Foong, for the advice and cautionary tale. We hope to seal the deal with some reputable insurance house in the near future!