Let’s face it! Many people often do not think about their children’s future early enough. However, that should not be the case. With the ever-increasing uncertainty, especially during the current COVID-19 pandemic, it is necessary to plan your child’s future. As a responsible parent, you need to protect them with appropriate types of insurance. There are numerous insurance policies you can opt for because the right insurance is critical to leading a comfortable financial life. In this article, we shall highlight the types of insurance every parent should have for their children.
Do you already have any of the insurance covers for your children? Tell us your experience in the comment box below.
#1 – Life insurance
In African families there seems to be one uncomfortable conversation that rarely happens. The conversation of death and continuity after death. Parents avoid discussing any plans and it is only until their death that those left behind figure out the true nature of the affairs of the departed. In the US, many African immigrant communities come together and raise funds as a community to support the family of the departed. Too often, those very limited funds is all that is available to pay for funeral expenses and if the bereaved family is fortunate, there might even be some funds left over to support the family’s immediate needs.
Death is the most certain thing that will plague us all regardless of our financial situation. Having life insurance is the most important insurance you can have to protect your family and legacy.
Life insurance is a contract between a policyholder and the insurer that guarantees that the insurer pays a sum of money to the policyholder’s named beneficiaries in exchange for premiums paid by the policyholder during their lifetime. This happens when the policyholder dies. Having life insurance can be children’s only hope to completing their education if anything should happen to their parents.
Life insurance comes in various types. To learn more, you can watch this video here.
#2 – Health Insurance
Health insurance is a policy that provides payments of benefits as a result of sickness or injury. The type and amount of healthcare costs are stipulated in the agreement between the insurance company and the insured member. The various insurance covers fall under two categories:
- Limited cover
- Unlimited cover
The best health policy is the one that can accommodate nearly all the health issues of an individual. The health of a child is paramount to the success of that child. Also, children are more prone to falling sick. Therefore, most parents undergo tremendous stress trying to pay medical bills. An individual will benefit from the insurance if a notification is sent on time in case of any sickness. Does your policy cover you in the event of a terminal illness? These are questions that you have to ask yourself before choosing a health policy, the extent of coverage will also be of importance. A good health policy must cover the following:
- Inpatient expenses
- Outpatient expenses
- A wide network of the service provider
#3 – Disability Insurance
Disability insurance covers any disability to a child that occurs before the age of 22. The benefit is paid to the parent and this will cater to the needs of a disabled child. It can also cover against loss of income due to accidental physical harm. This helps you cater for adjustments in your lifestyle. The policy has two categories namely;
- Short term disability policy
- Long term disability policy
The two policies play an important role in the event of a disability. When subscribing to this type of insurance policy, it is very important to consider the following;
- Are there any other rights to buy other policies?
- What are the benefits you get from the policy?
- Is there any cost of living adjustments?
- Does the policy allow you to return to work part-time in case of a disability?
#4 – Auto Insurance
Auto insurance, also called vehicle insurance, motor insurance, or car insurance, can cover the vehicle within a given region or internationally. However, the terms of the insurance policy are specific to a given region. The owner of the vehicle can choose from the many options available. In most African countries, every car owner has to have an insurance policy by law. There are many reasons for having your car insured.
Firstly, auto insurance helps protect the family from incurring more expenses in the future in covering for injuries, destruction of property, and any liability that may arise due to accidents. Secondly, Insurance coverage saves time in negotiating for any damages that may be caused as a result of an accident. For example, comprehensive insurance covers bodily injury liabilities, property damage, collision damage, and events outside your control.
Collision coverage is an optional insurance policy under car insurance that covers the cost of repair for the damage done to your car when an accident occurs regardless of who is at fault. It applies to all the partners involved in the accident. Consider having this insurance if you will be driving your children around a lot or have someone do it.
Having the right car insurance policy for your vehicle is critical to safeguarding your children’s future. In the unfortunate event of an accident, the insurance money can make a huge difference. Since accidents are emergencies that can never be planned for, you will not have to dip into your life savings or the college fund. Better still, you will not have to go into debt to come up with funds to cover the aftermath of the accident.
#5 – Homeowners Insurance
Homeowners insurance is a policy that covers loses and damages to an individual’s house and assets. This insurance covers the whole house and the property contained in the house including interior and exterior damage as well as injuries incurred on the premises. However, it does not cover damages incurred due to natural calamities such as floods and earthquakes.
A homeowner who lives in an area prone to these calamities may need to take special coverage to insure their property from these natural disasters. It’s advisable to note that the homeowners’ insurance policy has a liability limit which determines the amount of coverage the insured has if an unfortunate accident happens. Note that homeowners insurance should not be confused with a home warranty or with mortgage insurance.
#5 – The Umbrella Policy
This is a special policy that acts as an umbrella to the entire family and their assets. It covers what other policies fail to accommodate. The policy can pay for defense costs which can add up even if you win the case. It’s advisable to opt for umbrella insurance cover if the total value of your assets is greater than the limits of your auto or homeowners liability. An umbrella policy does not provide coverage for injuries and damages to personal property, a criminal or an intentional action caused by someone else, and any liability assumed under contract.
The Bottom Line
Having the different types of insurance can keep your mind at ease. Also, a good health insurance ensures that medical bills do not eat into your income or wealth. Auto insurance comes in handy in the unfortunate event of an accident. As a parent, it is paramount to secure your children’s future. Remember, it is always better to be safe than sorry!