Does Children need insurance?

I am thinking of how to write about how a child should be insured as some ask if a child need life insurance.

I have been wanting to write about this and trying to be sensitive about it.

It is more to help parents to understand the importance of Incomeshield and some insurance planning for children and at the same time trying to be sensitive over this issue.

My view is that some form of insurance planning is advisable for the child as our parental responsibility and if they grow to adulthood, then the plan will meet their needs as parents for their family too.

Incomeshield is the primary important plan and the other plan is Vivolife other than just planning for Education Plan.

Newspaper articles are so common. I know it is rather sensitive issue for some to discuss about this.

Is Basic Medishield sufficent ?

Minimum one should have is a Basic Medishield and if one needs better medical care, upgrade to Private Shield Plans. My personal experience is Medishield is not sufficient if one needs kidney dialysis. I hope those who write and advocate that Medishield is enough will not continue to write from his own point of view in bitterness, as this will make those who followed his advice to face financial strain in time of need. One should understand their own needs and standard of medical care they need, to decide if Medishield or upgrade to private Shield plan is good for them rather than continue to condemn the private Shield Plan.

How CPF Life works.

(Click on the How CPF Life works or the picture on the right, and at the website click the pic to get to the info)

Member who opt in CFP Life will get the L Bonus, there is no free lunch, give you first, then collect from the yield of the "premium" in the future and put in the pool.

Normal annuity do not have such penalty and the whole premium grow with the principal sum, and refund with draw down accordingly.

Will the annuity payment will better or as good as insurer's annuity.

Below are two passage from the attach booklet I extract from their website.

(From CPF Life Guide Book, page 9)

Yes. Interest earned on the RA savings will continue to be paid into the RA. Interest earned on the annuity premium will be paid into the Lifelong Income Fund and pooled with the interest earned from the annuity premiums paid by the rest of the CPF LIFE participants to provide the life long payout under the scheme.

(Look like depending on which plan, the premium interest will be "penalised" and thrown (contributed) into the Lifelong Income Fund. Premium interest are being contributed by everyone into the pool. As plan will be compulsory for those age 55 by 2013, there is no choice to opt out if one finds a better annuity plan else where)

(from CPF Life Guide - Page 8)

There are 3 LIFE plans which provide a refund of the unusedannuity premium 9 on death, namely the LIFE Basic, LIFE Balanced and LIFE Plus Plans. Under any of these plans, the full premium will be refunded if you pass away before any payout has been made from your annuity. If you pass away after the monthly annuity ... payout has started, the unused premium will be refunded. Any refund will be made to your CPF account and paid to your beneficiaries.

(so look like from page 9, members will contribute the yield of the Annuity premium to the pool once a member join in the CPF Life, refund premium will be fixed without yield?)

Based on the CPF Life book, if the premium for Plan Basic Plus, the default plan, there is a 30% of RA to be set aside as premium.

At $120,000 in RA, $36,000 will be set aside as premium and DDA draw down from 65 to 80 and life long premium kicks in.

$36,000 set aside at age 55 @2% = $59,061 at age 80

$36,000 set aside at age 55 @4% = $95,970 at age 80

The amount of yield set aside to contribute to the pool seems a tidy sum.