American director and actor Woody Allen once said in his 1975 comedy Love and Death: “There are some things worse than death. Have you ever spent an evening with an insurance salesman?”
While the sentiment is rather harsh, in the past year or so that I have become well acquainted with several insurance agents,
I began to understand where Woody was coming from.
Not that there’s anything wrong with the agents, but buying insurance can be a mystifying process, especially since such products have become more complex and highly customised over the years to cater for individual age and gender groups, and objectives.
Every time I started a conversation about insurance, I would get a headache. And I procrastinated for as long as possible.
This all changed when I discovered I was pregnant.
Overnight, it made sense to think about what I was covered for since I was soon to be responsible for a little life. I soon learnt that there are very few insurance policies that cover an already-pregnant woman. Some policies require you to buy it a few months before getting pregnant – which does not work if the baby happened earlier than expected or was a surprise.
Over the course of many conversations with agents, I was introduced to a hybrid form of insurance that provided some level of medical coverage for pregnancy, which paid out upon death of the mother, certain pregnancy complications and congenital illnesses in the child, combined with an investment-linked insurance policy, also known as ILP.
ILPs are life insurance policies in which the premiums you pay fund both life insurance protection and units in an investment fund, such as unit trusts.
Prudential’s PRUfirst gift and AXA’s Mum’s Advantage are examples of this type of insurance. For $100 a month, I was covered while I was pregnant and when my son was born, it converted into an ILP that covered his life for $100,000 while accruing a cash value from the investment portion, which I was told by the agent could be cashed out when he was older and say, needed money for university.
This sounded appealing, so I bought one such policy when I was pregnant. But the pros and cons of such a policy became clearer to me only over time.
Firstly, it was good that it offered a measure of coverage for pregnancy, but do keep in mind that the payout is not earth-shattering: $5,000 on death of the mother, or $5,000 for pregnancy complication or congenital illness. Hospital care benefit is only $100 a day and capped at a maximum of 25 days.