Why Insurance For A Newborn Baby Is Of Utmost Importance

The vitality and absolute necessity of a health insurance policy is understood and appreciated by most people residing in India. A certain amount of money (known as premium) is paid by the policyholder in return for which he/she receives coverage when required.

A comprehensive life insurance policy offers protection to you and your family members when unforeseen events strike. Such events include death of the main earner, hospitalisation, critical illness, and so on, which may generate high medical bills and other peripheral costs. Therefore, when it comes to a newborn baby, having adequate insurance coverage becomes all the more important, be it health insurance or life insurance.

Importance of Cash Value Life Insurance:

A cash value life insurance policy can turn out to be a great investment vehicle for your newborn baby as it will offer protection to him/her throughout his/her lifespan. Upon reaching adulthood, your child can have ownership of the policy and can thereafter borrow against the same or withdraw the element of cash value that has been stockpiling since the policy’s inception.

Importance of Insurance for Fulfilling your Child’s Future Needs:

The importance of a cash value life insurance policy will be appreciated the most during the following situations occurring in your child’s life:

• When they want to pursue their higher education from a prestigious college or university.
• When they want to purchase a vehicle at a later stage in life.
• When they want to give a downpayment for a house they want to purchase.
• When/if they want to travel around the world.
• When/if they want to start a business of their own.

In case your child does not end up using the cash value for the above-mentioned scenarios, the same can be used at a later stage in life for the following:

• If/when they want to add to their retirement income.
• If they want to take care of any medical expenses that their health cover is not covering.
• If they want to pay for any of their existing policy premiums.
• If they want to support their own family financially and take care of their needs.

More than a comprehensive health cover protecting your child against any unforeseen medical event, it is equally important to purchase one for the following reasons:

• Less or No Exclusions: Since most newborn children are healthy when they are born, insurance companies do not encompass any exclusions for their policies. Even if there are exclusions, they are usually fewer in number. As you grow old, you tend to be more susceptible to diseases and illnesses, hence you are required to pay a higher premium. Newborn babies are usually born with a clean slate of health with no pre-existing conditions and therefore their policy exclusions are also less.
• Low Premium Amount: Be it a life insurance policy or a health cover, premiums for young people are typically lower. This in turn means that if you are investing in a policy for your newborn baby before they are born or immediately after their birth, you will be required to pay a relatively low premium amount. This amount will be significantly lower as compared to investing in a policy when they are older. Purchasing a health insurance policy for your newborn will also be beneficial in case they are diagnosed with a critical illness in the future.
• Insurance Cover from the Start: Falling sick and consequent treatment can be a distressing activity, especially for a newborn child. Moreover, babies are not able to verbally communicate the kind of pain or discomfort they are in. Therefore, a doctor may want to admit your newborn child for tests and observation, if he/she has symptoms that have heightened. For situations like this, it is important that you have a comprehensive health cover for your newborn baby.

The above-mentioned reasons are why you should purchase an insurance policy (life or health) for your newborn baby early on.