Question:

Dear Money Gurus, I’m a mother of another new born. Currently, my insurance advisor is telling me to start a Life Insurance plan for both of my boys. But since the birth of my new born, I do not have a lot of spare cash now. What are your advise?

Cashless Mom

worried mom

Answers:

Guru Ed:
Congratulations! I can understand why you are at a cross road now. Money is never enough. Should you start a life insurance policy for your child? I will suggest that you may wish to consider a education endowment plan instead. Such plan will generate an average of 2.75% – 3% p.a of returns which is far better than to put it in the bank.

With a rider of waiver of premium, you can be assured of your little boys education, should any unforeseen circumstances happen to either of the parents. Budget within you r own means. Start small, rather than not to start at all.

Guru Foo:

Dear Cashless Mom, you are not alone in this situation. Many young parents do go through the same phase. May I ask what your priorities are for your children? Providing coverage for them while they are young or building up their education funds?

Major mistake for parents is to start buying insurance policies for children, while neglecting their own coverage. Remember, parents are the money making machine. It should be protected 1st. Perhaps, you can start a simple SAVE-AS-YOU-EARN scheme, until you are comfortable with your finances, then you can consider to start either a life policy or saving plan, according to your priority then. The key is to start the habit of saving and protect the potential income of your family.