The issue of taking out insurance on children’s lives can be sensitive. In 2016, the government blocked the deduction of child funeral policy fees from child welfare grants, with the aim of ensuring the grants were used to cover basic needs.
Across the board, there are limits to the amount of cover that can be taken out on a child’s life. We consider insurance products available for children, and the cover they offer.
Insurance products available for children
While often thought of as a standalone product, medical aid is one form of insurance to which children can be added. In South Africa, medical aid cannot be taken out individually under the age of 18 years.
However, as this aims to cover medical expenses, it is not a form of insurance as such. Some products specifically offer protection for children that will safeguard them under a range of circumstances.
Tom Crotty, lead specialist for Liberty Risk Technical Marketing, highlights the benefits available under Liberty’s Lifestyle Protector offering.
“Depending on the benefit, this can be taken out on behalf of children to provide either them or their parents with financial protection, in the event that any of them become critically ill, permanently injured, or pass away,” he says.
“We offer the Child Living Lifestyle, Living Lifestyle Dependant Protector and funeral benefits.”
The Child Living Lifestyle benefit caters for 12 types of critical illnesses, most of which are child-specific. “The product covers a child up to their 18th birthday,” says Crotty.
“If a child is diagnosed with one of the medical conditions, and meets the criteria for severity, the payout provides much-needed financial relief in the event of unforeseen costs, for example, medication or rehabilitation not covered by medical aid.”
Conditions covered include child-specific cancers and specific organ failures.
Crotty says the Living Lifestyle Dependant Protector is taken in conjunction with an income protector benefit and pays out up to six times your insured monthly income.
“This money can give a parent financial support if they need to care for their child and take time away from work,” he says.
Discovery Life offers a Child Protector benefit that caters for childhood-specific conditions, with cover as high as R6.4 million, to ensure children can access quality medical care, says Kashmeera Kanji, head of market analytics and R&D at Discovery.
This benefit makes payouts of between 5% and 100%, tailored to child-specific conditions in all major body systems. It includes a 100% payout for all childhood cancers.
Some products specifically provide for children’s education.
Liberty’s EduCator benefit covers the costs associated with a child’s education, and includes payouts for tuition at independent or public schools, and home-schooling. There is also cover for tertiary education. Allowances help to cover expenses such as extra lessons, uniforms or stationery.
In addition to the above, Discovery Life offers the Global Education Protector, which covers your children’s education fees if you die, or become ill or disabled.
“This is a product taken out by the parents with the benefits intended to indemnify the cost of education, at the same time as saving towards the cost of tertiary education,” says Kanji.
The Global Education Protector policy document states, “Your children’s education costs will continue to be covered until they receive their first tertiary qualification, or until they turn 24. If you reach the age of 65 without ever having made a claim, your policy will convert to provide you with life cover, disability cover, or severe illness cover, depending on the claim events you have selected.”
The annual payouts can be as much as shown below, per the level of education and the type of product that has been chosen:
- Creche – R56,855
- Pre-school – R99,496
- Primary school – R142,137
- Secondary school – R177,672
- Tertiary institution (local) – R64,290
- Tertiary institution (international) – $71,209
Where parents have chosen offshore education protection for their children through the Dollar Global Education Protector, payments are as follows:
- Creche – $5,920
- Pre-school – $11,820
- Primary school – $17,740
- Secondary school – $29,540
- Tertiary institution (Ivy Leagues) – $74, 070
- Tertiary institution (all other international universities) – $17,740
Management of health and wellness directly impacts insurance risks. Based on this, parents are rewarded when they manage their health and wellness with a financial asset that can help fund their children’s tertiary tuition fees through the University Funder Benefit.
“As much as 100% of tertiary education costs can be funded through this benefit, at no additional cost,” Kanji says.
Future insurability of childhood diagnoses
There are a number of conditions, which can be lifelong, that present themselves during childhood or at the onset of puberty, such as diabetes. These chronic conditions can be excluded from insurance policies, so any claim related to the condition would not be paid out.
When asked how the childhood diagnosis of a lifelong condition can affect insurability, Crotty says there are various factors an insurer would take into account before making a decision.
“Some of these include the impact of the condition on the child’s long-term health and expected lifespan,” he says. “In addition to this, the management of the condition and the resultant symptoms may influence the decision.
“For some individuals, the condition could lead to premium loadings and/or exclusions being placed on their benefits, or the application being declined.”
As it stands, a benefit that caters for the future insurability of a child’s life does not exist at Liberty.
Various insurers offer a range of funeral products that allow the main member to include their immediate and/or extended family in the plan. Children can be included in such a policy.
Crotty says Liberty offers a funeral benefit, and the cover amount paid out for a children’s life is limited, depending on the age of the child.
Article credit Insuring your children | JustMoney