Why Being Responsible Parents Means Protecting Yourself First (Before Your Children)

As parents, we naturally want what’s best for our children. Very often, we put our children’s needs ahead of our own. For example, many parents may splurge on what their children want or need, such as toys, comfortable clothes and enrichment classes, while at the same time, scrimping when it comes to themselves.

Jack Hungelmann, the author of the book "Insurance for Dummies," says parents and grandparents sometimes make the mistake of only insuring children's lives "when the worst economic loss would be the loss of a parent's income."

"The first and foremost thing to do is make sure that Mom and Dad have enough life insurance," he adds. "The only thing worse than losing a parent is losing a parent without adequate life insurance. That is where the focus should be."

As parents, we need to prepare ourselves and our children against adverse circumstances. While we shouldn’t be living our lives expecting bad things to happen (just like we don’t board a plane expecting that it will crash), it’s sensible to take precautionary measures while we still can to ensure that our family is ready for the curve balls that life throws at us.

Life insurance is an example. When we buy a policy to cover ourselves, we are actually buying protection for our children. It ensures that if anything does happen to us, be it death or permanent disability, our children will be financially protected and supported even if we are no longer around.

Saying No To Life Insurance Puts Our Children At Risk

Not buying life insurance for our family is like setting sail on the Titanic without having enough lifeboats. If everything goes well, then nobody is going to notice anything amiss. However, if something does happen, then similar to the Titanic, we will be caught off-guard. If we are no longer around, our young children will face the financial consequences of being unprepared to tackle the crisis.

To be clear, financial hardship is just one of the many challenges that our children might need to overcome if we are no longer around. While our presence in our children’s life cannot be replaced, the income that we would have earned to support them can be protected through insurance.

How much you need to provide for your children is dependent on a few variables:

How much your children need until they become independent?

In Singapore, most people start working in their early 20s. Ideally, you should factor in the cost of providing for each child until the age where they can be expected to start providing for themselves.

Do you intend to pay for university?

University education is notoriously expensive, and it would easily cost $8,000 or more (in today's dollar terms) each year, up to a period of four years. If you are intending to fund your child’s university education, you will need to set aside this sum of money.

Other additional cost incurred?

In your absence, it’s possible that your spouse may 1) decide to stop working to take care of the children or 2) engage additional help e.g. employ a domestic helper.

Number of children you have?

The more children you have, the higher the life insurance coverage you will need to ensure sufficient protection for all of your children.

Don’t get me wrong, buying life insurance for your children is also important. At the same time, buying the right insurance plan for your child while neglecting your own coverage is akin to putting on a life jacket for your children, while forgetting to put it on for yourself. You first have to protect yourself, before you can effectively protect your children.