Personal Finance

Expecting a new born? How to insure him/her

Parenthood can be a delightful experience. If to go by some wise men’s views, it is be the most fulfilling experience in a person’s life. And everybody – from the parents to relatives and friends – will be excited to welcome the new one. Well, to have a new member to the family is a great feeling; but for the parents, it is a new responsibility as well. Now they need to take care of a new guest, who is going to be an inevitable part in their lives. Preparing oneself for the ‘day’ in advance can relieve oneself of unnecessary pressures and inconvenience and when the time eventually when you become a father/mother, you will have ample time to spend with the baby rather than worrying about the future course that should be taking for the baby’s future.

Parent’s job on the child’s behalf may involve preparing for future medical care, selecting a pediatrician for continued care, arranging for baby furniture and clothing or fulfilling the legal obligations in terms of governmental records and other aspects, to name a few. Now, to the subject of discussion, alongside a social security number, your baby – as any individual on this earth – needs an insurance cover, even if you are still uninsured. It may not be a car insurance but definitely a health insurance or life policies. After all, he/she is destined to live on this earth only. And it is really not a secure place to live on as such!

The insurance policy, the child as a new visitor to the earth, where he/she is going to spend another good 70 – 80 odd years, is going to be a help all through his/her existence on earth. Signing a suitable health insurance plan for the child could relieve the parents, not only in terms of time but also peace of mind. As he/she grows up, the health insurance policy will continue to offer the valuable protection he/she needs. After all, who knows when one is going to get stuck down by an illness?

But signing a life insurance policy for the new born cannot be an intelligent option, even though there are no formalities that prevent such an outcome. It is in fact the parents who are required to own a valid life insurance policy. The answer to this argument is rooted in the definition of a life insurance policy itself. Life insurance is meant to protect the income of the breadwinners in a family. If something happens to him/her, dependents can continue to have the alternate financial security.

In the case of a child, technically they are liabilities than assets, for which one may need protection. Also, child insurance policies are disproportionately expensive as opposed to the benefits and have a lot of hidden costs and fees.

Hence, from a would-be parent’s point of view, your child definitely needs a health insurance policy but not a life insurance. But the parent should be subscribing a life insurance policy. It is one of the few occasions when the child’s needs take a back seat.