Insurance & Costs of having and raising a child

[d.o.g.]

So, any incident that arises out of non-foot sport will not be covered?
Cycling, dragonboat, canoe, go kart are all excluded?

That would appear to be the case. I wonder about swimming too. That's why I pointed out that one's exercise/recreation options will be severely curtailed if one wishes to retain cover.

I think this clause is also in the aviva disability insurance too.

Aviva is the insurance provider for the SAF policy. So it's no surprise the same exclusions apply.

Years ago it was because of such exclusions with Aviva that I went with Great Eastern. At that time their policy did not have such exclusions but cost twice as much IIRC. I paid up because I did not want my recreation to be so restricted.

---

Financial Planner's view , My daughter's current policy is a whole life one, and covers death, TPD and CI for S$250,000. It is payable for 20 years after which no more premiums are required; and will cover her FOR LIFE. Her logic is that the CI coverage is very high for a child so young, and at age 20 she cannot buy a cheap term policy with such a high CI coverage (which is true since I asked her to check this for myself , a term policy covering $200,000 CI is fairly expensive). Also, as the policy covers her till death (even her natural death), it is an asset which can be passed on to her dependents and the next generation. So assuming she dies at age 80, there will be 80 years of compounding which can be very significant.

For the umpteenth time, if you want an ASSET for your daughter, INVEST the money. If you want PROTECTION then buy TERM INSURANCE.

If you want the insurer to provide both protection and investment it will cost you more and give you less, simply because your upfront commission cost is higher and your annual expense ratio is higher.

You can achieve the SAME (probably better) results as the insurer by buying term and investing the rest, simply because you are paying a much smaller insurance commission to the agent (save $$$) and no management fees to the insurer (save even more $$$). The 1.5% per year cost advantage over "80 years of compounding" is overwhelming. Run the numbers and see for yourself.

The current annual premium for my daughter for $250,000 coverage for death, TPD and CI is about $2,100 per annum, payable for 20 years still she hits 21. After that, the policy is FOC and the amount will compound all the way till her death (natural or not). My financial planner has confirmed that buying a TERM policy for 20 years costs about $540 per annum with coverage of $200,000 death, TPD and CI. But when she takes up TERM insurance when she hits 21 with the same coverage, premiums will be $1,620 per annum for her and will be for life (assuming she covers for life). Also, the claim amount will be a flat amount of $200,000 without bonuses should I choose TERM for her when she is 0-21 years, and when she chooses TERM after 21 years.

Again, your daughter does not need term insurance "for life". As I have pointed out, she has zero economic value so you should not even buy insurance on her life to begin with.

If you want to buy term CI, the policy should expire when she hits age 65 because by that time her investments should have reached the point that she can self-insure the incidental expenses. The big hospital bills will be covered by a H&S policy. A term policy that goes to age 99 or that covers "for life" is generally a waste of money.

Get a quote for a term CI when she is age 21, expiring when she is age 65. The annual premium should be much lower than $1,620. Also consider buying a guaranteed renewable term CI policy. Although the premium rises in later years, in later years her income will also have risen so she can afford the higher premium. Early on, her income is low but the premium is cheap. This way her costs will better match her income.