Life Insurance Checklist for Young Parents




We usually get asked about Life Insurance when our customers have their first child. This is the time when couples start to seriously think about their responsibilities as a parent and to each other.


Many young parents know that they need insurance, but are not sure of which type to buy, so we have listed the 4 key types of insurance products that you should have as a young parent and why.

The Young Parent's Insurance Checklist:

1) Term insurance for parents (or more commonly known as Life Insurance)


The first two insurance products in this list are must-haves for young parents.


The first product that young parents must buy is Life Insurance. Whilst you may not have needed Life Insurance before because no one was financially dependent on you, this changes once you have your child. Should you no longer be there for your child, the impact on your child's future will be devastating. And don't think that only one parent needs to buy Life Insurance to protect your child. Ideally, both parents should be covered by Life Insurance.


If both parents are working, the Life Insurance coverage will make up for any loss in income. If your spouse is not working and is the main caregiver for your child, you may need additional financial support to arrange for alternative childcare.


Life Insurance is the Number 1 product that we suggest that you buy when you become a parent and the good news is that Life Insurance is one of the cheapest form of insurance coverage you can get! For example, a 20-year Life Insurance policy for with coverage of HK$1,000,000 will cost a 30 year old about HK$ 150 a month in premiums.


2) Medical Insurance for the whole family


If you are working, you may get some form of Medical Insurance coverage from your employer. However, the Medical Insurance may not extend to your child. Furthermore, if you are in between jobs, you could be left with no Medical Insurance at all.


Ensure that you and your spouse have your own Medical Insurance coverage. If you do not wish to overlap with your own employer's medical benefits, then buy a policy with higher excess levels so that you are covered for very large sized medical bills. This way, you should be able to afford most major medical expenses and these medical bills will not cause financial stress for the family.


You should also buy Medical Insurance for your child. Children are actually more prone to accidents and illnesses and Medical Insurance will be able to help you defray large medical bills.


Medical Insurance can be bought for children as young as 15 days old.


3) Critical Illness Insurance for the whole family


Critical Illness Insurance policies are another product type that young parents can consider buying.


The Critical Illness Insurance product typically pays out a lump sum if the insured is stuck by an illness that is listed in the Terms and Conditions of the policy. The most common illnesses such as cancer, stroke and heart attack are usually covered by such policies. Do note that the illness does need to meet the definitions as set out in the Terms and Conditions of the policy and would not cover early stage illnesses unless specified.


4) Permanent and Total Disability Insurance


Permanent and Total Disability Insurance is usually sold together with Life Insurance products. Permanent and Total Disability Insurance would provide a lump sum pay out if the insured meets the disability criteria set out in the product's Terms and Conditions.


Unlike Disability Income Insurance, there is no pre-requisite that you need to have some form of income to begin with, so children can also be covered by Permanent and Total Disability Insurance.


Permanent and Total Disability conditions may fall outside of "medical conditions" that qualify for Medical Insurance or Critical Illness Insurance payouts. For example, some Permanent and Total Disability Insurance policies provide a payout if the insured is not able to carry out two out of five activities of daily living such as not being able to walk or not being able to physically write.

Permanent and Total Disability Insurance may be bought for both parents and children so as to meet loss in income or additional caregiver expenses brought about by the disability.


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