Baby brings fresh review of insurance plans

PHOTO ILLUSTRATION: ISTOCKPHOTO

Financial objectives, priorities do change with the arrival of a little one

There's nothing quite like the impending appearance of a baby to give you a fresh perspective on your surroundings - and your life.

When I discovered I was pregnant last year, it began a nine-month whirlwind of baby-proofing renovations, spring cleaning, shopping for baby products and reorganising my home.

It also made me think about cleaning up my finances.

It was about time anyway that I reviewed the portfolio of insurance plans I had bought in my early twenties when I first started working and which I had more or less neglected since.

After all, I now had to make sure I had sufficient financial protections in place, as I was going to have a dependent for the first time in my life who will still need food, clothes and books should I lose my job, fall sick or get into a major accident that threatens my income.

Over several months of studying and decision-making, I ended up terminating a few policies. These included an investment-linked plan that had turned out to be quite the dud purchase and a health policy whose coverage overlapped with another.

With a baby on the way, the world suddenly seemed fraught with danger and potential tragedies.

Knowing that I needed a pair of fresh eyes and an objective point of view, I called on an expert to help me look through my portfolio and suggest what changes I should make, if any.

Not surprisingly, our review turned up various gaps and flaws in my coverage.

This was partly because I had signed up for my existing policies when I was young and clueless about what types of insurance plans I really needed, and so had ended up with some unsuitable, and, frankly, wasteful ones.

And also partly because I now needed a bigger financial bulwark for my growing family.

Over several months of studying and decision-making, I ended up terminating a few policies. These included an investment-linked plan that had turned out to be quite the dud purchase and a health policy whose coverage overlapped with another.

I also signed up for a few new policies. One, the AXA Term Protector, will give my family additional cover for the next 30 years to help cushion the blow if my income is ever threatened.

The idea behind such term policies is that it should complement your basic life and health insurance plans to provide added protection while you are in your prime and your kids are still dependent on you.

When I first started working, retirement was probably still far from my mind - none of the policies I had were catered towards saving for my retirement.

And so I signed up for the TM Retirement GIO by Tokio Marine. Under the plan, I pay an annual premium of about $3,650 for the next 15 years and once I reach 60, I will receive about $5,800 annually for as long as I live.

(This also gives me the extra kick I need to eat a balanced diet, exercise regularly and live a long life, as the policy will pay for itself if I live to at least 70.)

After my son was born in March, it was then time to think about starting an insurance portfolio for him.

Parents are spoilt for choice these days. Not only are there more insurance policies out there than ever before, some also come with special perks this year for SG50 babies.

Great Eastern, for example, is waiving the first-year insurance premium for all babies born this year.

AIA Singapore is giving jubilee babies Robinsons gift cards loaded with up to $200 if parents sign up for its AIA HealthShield Gold Max plan.

I did sign up for this AIA policy - not for the Robinsons card though that is a nice perk that will come in handy - but because it seems like a solid medical plan with competitive premiums.

This is an integrated plan - a private hospitalisation and surgical plan comprising a basic MediShield component (to be converted to MediShield Life automatically on Nov 1) and an additional private insurance component.

I also signed up for a rider that will cover the deductible and 10 per cent co-insurance, which I would have to pay out of pocket under the main plan.

The main plan and rider combined means that inpatient hospital bills will be covered in full.

For my son's basic protection, I went with the Tokio Marine Legacy LifeFlex, a whole-life plan. A selling point of this plan for me was that the firm will waive the premium in the event that either parent - my husband or I - dies, suffers total permanent disability or gets a critical illness. Tokio Marine also has a strong track record - it has never once in its history cut bonuses on its policies.

Knowing how expensive education can be, and how rapidly university fees have climbed over the past couple of decades, I also signed up for a savings plan to help me set aside enough for my son's future education.

The AIA Smart Growth 21 was most suited to my budget and offers a competitive yield. I only have to pay premiums for the next 12 years, and the plan will continue to accumulate bonuses until it matures when my son reaches the age of 21.

At this point, it will give a lump sum payout that can be used to fund his post-tertiary education.

And children being children, I know it is only a matter of time before my son gets into a scrape or picks up an infection at childcare.

So I took up the Tenet Sompo PA Star plan, which offers payouts for minor injuries, illnesses such as dengue and hand, foot and mouth disease, and other accidents and emergencies requiring only outpatient treatment, which will not be covered by the hospitalisation and surgical plan.

Being a new parent has been an exercise in constant anxiety: Is he eating enough? Is he hitting his developmental milestones on time?

But I have to say that signing up for these insurance plans has helped ease my worries about the worst possible scenarios.

Of course, the irony of it all, as any insurance policyholder will know, is that after having bought all these policies, my most fervent hope is that my husband and I never actually have to make a claim on any of them.

A version of this article appeared in the print edition of The Sunday Times on October 04, 2015, with the headline 'Baby brings fresh review of insurance plans'. Print Edition | Subscribe