This link about pregnancy insurance keeps popping up on my facebook page. Pregnancy insurance is something I have seriously looked into and have some views on. I have resisted commenting on the post even when my friends share it because I have good friends and some family in the family industry and I don’t want to offend them. However today it just popped up one time too many for me to resist.
Here is the link so you have a fair chance to see the original writer’s side of the story and take a view.
In this post, I will be presenting a different view. There, I’ve said it and incurred the wrath of all insurance agents and brokers out there. But let me explain. I am a believer in insurance – where it makes sense. My medical insurance cover is probably higher than most, and I utilise a combination of whole life, term life and savings plans to create a safety net for my family.
Pregnancy insurance is something that I have looked into ever since I conceived my first child. There are many more products now than when I first started looking. However, even with many more products today, none of them make sense for me for the following reasons:
1) They only cover very limited congenital diseases – 18 is the highest I have seen. Compared to the endless possibilities of congenital conditions out there, the chance that the pregnancy insurance will come in useful is slim.
2) Payouts are low relative to potential medical costs if something bad really happens. Generally the idea of insurance is so that you don’t have to worry about medical costs, but pregnancy insurance cover is typically something like $10,000 or less, which is nowhere near enough to cover medical costs for the alcovered conditions or complications.
3) Finally, the so called guaranteed insurability needs to be clarified. The promoters of pregnancy insurance claim that it is great for the unborn child because it gives him guaranteed insurability meaning even if he is born with certain medical condition he will not be rejected for insurance cover. Sounds good right? Well, look more closely. The guaranteed insurability is typically for savings plan, or life insurance, or some other similar very specific savings/investment type product. It is NEVER health and surgical or similar medical plan. That defeats the purpose then. What you need for a newborn is to get a plan that covers medical costs if he/she falls sick, even if the sickness is something he/she is born with. Unfortunately this most wanted cover is not available. Instead, the insured is enticed into getting a life/savings/investment plan she may not otherwise need.
If anyone knows of any pregnancy insurance that defies the above objections, especially item 3, I would like to know about it and would seriously look into it. Anything else is to me not useful. The cover is full of holes and any sense of security you may get out of it is false.
I would, however, urge all Singaporeans to look seriously into a good healthcare plan that covers outpatient treatment. Most Singaporeans are seriously under-covered in this respect. The good ones also cover maternity and complications so you shouldn’t even need to think of pregnancy insurance.
Apart from medical, the second most important cover is to ensure that your life insurance payout is sufficient to provide for your dependants for their lifetime after taking into account inflation. Usually it would not be practical to achieve this with just whole life plans so use a combination of term and whole life if you have many dependants. It is important to note that life insurance here refers to life insurance for yourself and your spouse, not for the children. For the children, what is important to me is that his/her medical expenses are covered, not life insurance.
After this, consider some very basic savings plans as a form of enforced savings. However, if you are disciplined and/or a seasoned investor, then it may be better to just save and invest yourself.
Finally, of course, the usual fire insurance for homes, car insurance. Apart from that, those “special” insurances like pregnancy, or new funky ones like Zika insurance are not worth the money.
*Bracing myself to be flamed by insurance agents and brokers*