[Insurance Tips②] When Your Child Is Sick, Is Children’s Insurance Worth It?

[Asia Economy Reporter Changhwan Lee] # Kim, a man in his 30s living in Seoul, became increasingly interested in fetal insurance after becoming pregnant. Although it is before childbirth, he heard that if he enrolls in insurance for the child in advance, he can receive coverage for possible congenital diseases. However, he recently learned for the first time that there is no separate product called fetal insurance at insurance companies, and what is called fetal insurance is actually enrolling in children's insurance from the fetal stage.

Due to low birth rates, late marriages, and the commonality of families having one or two children, along with increased interest in advanced maternal age pregnancies and child-rearing, social interest in children's insurance is growing.

Children's insurance is a product that covers medical expenses due to illnesses and injuries that may occur during a child's growth process, as well as liability arising from the child's daily life. It can be enrolled from the fetal stage, and depending on the insurer, there are products that allow enrollment up to age 30 or older.

Children's insurance became widespread after the 2000s. Led by Hyundai Marine & Fire Insurance, which holds over 60% market share, more than ten insurance companies sell related products. This reflects the increased demand for children's insurance, and it is estimated that more than half of newborns last year were born with children's insurance coverage.

We have summarized some essential things to know and precautions before enrolling in children's insurance.

Children stock photo [Image source=Yonhap News]

What is the difference between children's insurance and fetal insurance?

In fact, there is no product called fetal insurance. Since a fetus does not legally have personhood, it cannot be the subject of human insurance protection.

However, insurance companies, considering the increase in advanced maternal age pregnancies, allow enrollment in children's insurance even during the fetal (pregnancy) stage so that newborns with congenital diseases such as disabilities or malformations can receive insurance benefits.

Therefore, through a 'fetal enrollment rider' that conditions on the birth of the fetus, an insurance contract can be made targeting the fetus. This is conveniently called fetal insurance, but in reality, it is a form of children's insurance.

Should we definitely enroll in our child's children's insurance?

Children's insurance is not mandatory, so it is not necessary to enroll. However, it has the advantage of mitigating economic risks caused by accidents and illnesses that may occur during childhood. It also has the advantage of lower premiums compared to adult insurance.

The insurance period for children's insurance is broadly divided into 30-year maturity and 100-year maturity (with various actual maturities such as 10, 20, 80, 90 years). Depending on the maturity setting, coverage can extend up to age 100, which can reduce the hassle of having to pay expensive premiums for other insurance after becoming an adult.

The 30-year maturity covers until the child's economic independence and has lower premiums compared to the 100-year maturity. Additionally, at maturity (upon reaching age 30), there is the advantage of being able to enroll in new adult insurance or convert the contract to 100-year maturity using the contract conversion system. However, depending on health status at maturity, new contract enrollment or contract conversion may not be possible.

When is the best time to enroll in children's insurance?

If you decide to enroll in children's insurance, it is advantageous to enroll as early as possible due to the nature of insurance products. Premiums increase over time, so enrolling early means you can get a cheaper rate.

Especially when enrolling while the child is still in the mother's womb, it is generally recommended to enroll within 22 weeks. Enrollment after 23 weeks is possible, but important riders such as congenital anomaly riders may be restricted.

Also, even if you enroll in children's insurance during the fetal stage, you should know that actual coverage starts after birth. Most products do not cover examination costs related to diagnosing congenital diseases during the fetal stage.

Children stock photo / Photo by Dongju Yoon doso7@

Is pure protection type better or maturity refund type better?

The pure protection type is cheaper but does not refund premiums, while the maturity refund type refunds premiums but has higher premiums. Both have clear pros and cons, so there is no definitive answer.

However, considering the primary purpose of insurance as risk protection, some suggest that it is better to pay cheaper premiums with the pure protection type and use the remaining money to create a savings account or deposit for the child's future. This also saves insurance fees.

You need to consider various factors such as your income level and whether you have multiple children when making a choice.

What about adults enrolling in children's insurance?

Recently, interest in children's insurance has been rising among adults under 30. Insurance companies have raised the eligible enrollment age for children's insurance to 30, and children's insurance has relatively lower premium burdens among disease and injury insurance products.

The wide coverage and relatively high diagnosis benefit limits are also considered advantages. The long coverage period makes it a good option for young adults starting their careers. However, it is advised to carefully review contract conditions and avoid paying excessive premiums relative to income.