Insurance & Costs of having and raising a child

[brattzz]

got look at P&A? personal accident protection?

[d.o.g.]

I've instructed my planner to terminate the life policy once it expires, and switch fully to term at $540 per annum. With the $1,500+ saved per annum, I can invest this money for her and build up a good asset for her to compound when she is much older. I am in the process of getting a quote from the planner on a TERM policy starting age 21 and terminating age 65, but I believe it should be much cheaper than the $1,620 per annum which I previously quoted.

Your current plan is apparently to:

1. Buy a term CI policy for your daughter, expiring when she hits 21; and
2. Let your daughter buy her own term CI policy when she is 21, expiring at age 65

You will run the small risk that before age 21 she develops a medical condition that does not activate the payout, yet makes her uninsurable e.g. diabetes is often an automatic disqualifier for ALL medical insurance.

You actually have 2 more options:

1. Buy a term CI policy for your daughter now, expiring when she hits 65. When she starts work she just takes over the premium payments. The single policy guarantees continuous coverage without further underwriting.

2. Buy a guaranteed renewable term CI for your daughter. When she starts work she takes over the premiums. The premiums start cheap, but escalate with age. Since she should earn more later in her career, this should not be an issue. As with option 1, coverage is continuous without further underwriting.

As usual, YMMV.

My insurance agent is a nephew of my dad's insurance agent. (who is of close relationship with dad).

I want to say i was mis-lead and want my preimums back. But i don't want to hurt the relationship.

Well, your insurance agent certainly had no qualms about hurting YOU financially. It's up to you to decide whether you want to continue the personal relationship, though it looks like you are better off terminating the professional relationship.

4) Personal Accident

Personal Accident plans are extremely profitable for insurers i.e. you are overpaying for the protection.

Look at the payouts and it's clear that for minor accidents like loss of a toe/finger the payout is laughable. For major accidents, you get the full payout, but chances are you will land in hospital anyway, and then you should be worrying about your H&S coverage.

Beef up your H&S coverage rather than buying a PA policy.

PA and hospital income plans do not pay enough when you really need the money, and for small bills you can easily self-insure.

Only the saving plan can give 3%. - This i will keep, to beat inflation.

The savings plan is essentially an investment. Why bother with an investment product that can only give 3% per year? Again, the money is being invested by the insurer mainly in index funds, or in index stocks, which amounts to the same thing. Might as well DIY into an index fund and save yourself 1.5% per year. As you have noted, over 20 years this difference results in a huge advantage for you.

[brattzz]

thanks D.O.G,

looks like i'm really "shaven" this time... ;O

[JJW]

two earlier issues raised on disability income insurance:

1) coverage while out of work/between jobs (other than during disability) - there should be a time period specified i.e. policy will not terminate immediately if you quit your job and look for a new one.

2) exclusion for sports or competitive racing other than on foot - i believe this should be read as i) exclusion for sports or ii) exclusion for competitive racing other than on foot. and exclusion for sports is pertaining to participation in professional sport. i would be surprised if the intention of this clause is to exclude leisure/recreational sports. non-foot sports should also be covered.

safest course of action is to confirm coverage with insurer, preferrably in writing.

[brattzz]

i was wondering... for normal noobies like me in both insurance and investment.. how can i get good sound advice if i didn't know there is valuebuddies forum?

How will i know what to buy, how to protect?

It's so unfair, and it's noobies that needs the most advice, but gets the worst and loses the most $... :O

[Musicwhiz]

i was wondering... for normal noobies like me in both insurance and investment.. how can i get good sound advice if i didn't know there is valuebuddies forum?

How will i know what to buy, how to protect?

It's so unfair, and it's noobies that needs the most advice, but gets the worst and loses the most $... :O

My advice - if possible find a trusted family member or very close friend of many years to ask about such matters. Even financial planners and brokers cannot be 100% objective and work in your favour!

[kazukirai]

It's so unfair, and it's noobies that needs the most advice, but gets the worst and loses the most $... :O

Why not look at it from another point of view? At least you got some advice. And you still have the remainder of your lifetime to make changes.

In a different day and age, you might not even have got the advice at all! Or at least a much lesser chance of getting sound advice.

Taking it one step further from here, the question is how to ensure that future generations obtain this kind of knowledge or at least know where to seek this kind of knowledge if there is a need to.

(Ok. This is getting OT. We're going into Financial Literacy here so if the discussion grows from here, then we might have to shift this portion into another thread.)

[brattzz]

My advice - if possible find a trusted family member or very close friend of many years to ask about such matters. Even financial planners and brokers cannot be 100% objective and work in your favour!

That's wat i did... and still end up worse off... :O

[Musicwhiz]

Hi brattzz, sorry to hear that. I guess it's really not easy to get good, unbiased advice FOC.

[d.o.g.]

I guess it's really not easy to get good, unbiased advice FOC.

It takes a meaningful investment of time and money to acquire the knowledge and experience necessary to be able to offer "good, unbiased advice". People normally only acquire such knowledge in order to charge for such advice, so don't expect to get it free. Everyone has to make a living somehow.

And always remember that free advice is worth what you paid for it.