Or is it just another gimmick?

Let’s get real—when you’re juggling rising living costs, car loans, groceries that mysteriously inflate every month, and your own insurance premiums, someone comes along and says:
“Eh, you should also buy insurance for your kids!”

You pause.
Wait, do kids even need insurance? They don’t earn money, they don’t have dependents… and they’re practically made of rubber, right?

Well, let’s break it down—Malaysian-style.

---

💭 The Common Reasons People Buy Insurance for Children

Most parents in Malaysia who buy insurance for their kids fall into a few categories:

Reason	Is it Valid?
“Want to secure their future”	Maybe
“Better to buy young, cheaper premium”	True
“In case something happens”	Valid
“Agent said it’s a smart move”	Let’s investigate

Let’s dig into the main types of insurance people buy for their kids—and whether it’s worth it.

---

1. 🏥 Medical Insurance / Hospitalisation Card

✔️ YES, this one makes sense.

Children are more prone to hospitalisation for minor illnesses (e.g., bronchitis, dengue, food poisoning). Medical costs in private hospitals can be significant even for kids.

Real Case:
A client’s 4-year-old in Klang was hospitalised for viral fever and dehydration. The 2-day stay cost RM4,800 in a private hospital. Luckily, they had a child medical card.

Key Points:

• Most policies offer lifetime renewability.
• Buying early ensures no exclusions for future conditions.
• Premiums are cheaper than adult plans.

🛑 BUT: Watch out for co-insurance or deductibles, especially if it’s a rider under your plan.

---

2. 💰 Investment-Linked Plans (ILPs)

⚠️ Use with caution.

These are often bundled with medical coverage and savings/investments.

While it’s true that buying young = lower cost, the child doesn’t yet have insurable income—so the protection benefit is usually small.

These plans are more about building savings than actual protection.

Alternative?
Instead of tying up money in a bundled policy, consider:

• A medical plan just for protection
• Investing separately via PRS, ASB/ASM, or unit trust in your own name for better control

---

3. ⚰️ Life Insurance for Children

🤔 Do kids need life insurance?

In pure financial logic: No. The main purpose of life insurance is income replacement. Since kids don’t earn, there’s nothing to replace.

However…

Some parents get it for:

• Future insurability: Lock in their eligibility while they’re healthy
• Cash value or maturity payout when the child turns 18–25

Still, be clear: this is not a priority if you haven’t sorted out your own protection.

---

4. 🎓 Education Plans

🧾 Often marketed under the “insurance” umbrella.

These plans are structured to mature when your child enters university. Some include:

• Guaranteed payout (endowment-style)
• Optional bonuses/dividends
• Basic protection in case of death/disability of parent

Pros:

• Disciplined savings structure
• Some protection benefit

Cons:

• Often low returns (2–4% p.a.)
• Lock-in period

💡 Better alternative: Consider investing separately into a goal-specific fund like ASNB, PRS, or a targeted portfolio through a unit trust/ETF.

---

🧠 A Malaysian Parent’s Decision-Making Checklist:

Before buying insurance for your child, ask yourself:

✅ Have I sorted my own insurance needs (life, medical, critical illness)?
✅ Do I have an emergency fund in place?
✅ Am I prepared to pay for standalone child medical coverage yearly?
✅ Do I understand what I’m buying—is it for protection, savings, or both?
✅ Can I commit long-term to the premium?

If most of your answers are “yes,” then buying child insurance might make sense—but it should never replace your own financial foundation.

---

📌 TL;DR

Insurance Type	Recommended?	Why
Medical/ Hospitalisation	✅ Yes	Protects against rising medical costs
Investment-Linked Plans	⚠️ Maybe	Only if you understand and can commit long-term
Life Insurance (for child)	❌ Not necessary	Children don’t have income to replace
Education Savings Plans	⚠️ Maybe	Consider better investment alternatives

---

Final Thoughts

In Malaysia, it’s not uncommon to feel pressured into buying insurance for your kids—sometimes from genuine concern, other times from persuasive marketing. But remember:

Your child’s greatest protection is a financially stable parent.

Focus on building your own strong base first. Then, consider insurance for your child based on practical, not emotional, reasons.