Financial protection
Children's insurance: Providing for your children.
A children’s insurance plan protects young children and helps build savings for later.
Children need protection and safety nets to support them should the worst happen. In this interview, insurance expert Burim Muji explains why children’s insurance is a sensible option and what benefits it brings compared to a savings account.
Burim: On the one hand, children’s insurance lets you comprehensively protect the child from unforeseen events, like accidents or illnesses, and the associated financial fallout. On the other hand, you can also use it to build up capital for supporting them as they venture into adulthood.
Burim: Children are inadequately protected against the financial fallout of disability, which is why it is even more important to give children extra protection against this, too. To this end, I recommend taking out a pension for loss of earning capacity to secure an additional income for the child.
It makes sense to start saving early on if you want to build up capital. Let us assume that your savings goal is CHF 20,000. If you want to reach this goal within 20 years, you need to set aside CHF 1,000 a year. If you want to reach this goal within 10 years, thought, you need to set aside CHF 2,000 a year.
Another option is saving in investment funds: I recommend saving in investment funds, rather than a traditional bank account, as soon as the child is born. This is because of the low interest rates at the moment.
Finally, child allowances can also be used for savings if a family is on a good financial footing and does not need to spend child allowances on clothing, nappies, etc. Of course, you will need to look at all this in more detail to decide how you would like to save money yourself.
Burim: From my perspective, the greatest benefit is the risk protection for the child. Unlike keeping your savings in a bank, the accumulation of capital is secured with children’s insurance: thanks to the premium exemption, you will always reach the savings objective for the child. Why? Because if a parent dies or loses their earning capacity, the insurance continues to pay the necessary premiums.
Burim: The services can differ depending on the provider. In principle, children’s insurance should include the insurance policy and a savings plan. This is important, in my view. Plus, you should pay heed to the insurance conditions, like: What exactly is insured? What exclusions are there? From when, and for how long, are the benefits paid?
Burim: Children’s insurance does not necessarily have to be taken out by the child’s parents: anyone, such as relatives or godparents, can take out this policy. Of course, the parents or their legal representatives need to give their consent, to protect the child.
Burim: Our insurance plan for children is a modular solution that combines three insurance products for comprehensive protection. The KIDS insurance plan includes full risk cover, a saving account for building capital and cyber insurance. From my perspective, this is crucial in today’s digital age.
Burim: Risk protection is based on a pension for loss of earning capacity, including a premium exemption, ensuring your child is well protected in case anything happens to you or them. With savings, you can build up capital for your child. Our investment experts invest your premiums in first-rate funds, and you can choose between three savings profiles: CAPITAL, CONTROL or PROFIT, depending on your security needs and returns expectations. With the cyber insurance module, you are protecting your child against the dangers of the internet.
My tips for protecting your children: Start saving early, save in investment funds and make use of child allowances. Because children are our future and that needs protection.
Burim: Our survey has shown that Swiss people are very interested in sustainable investments. It is particularly important that we promote sustainability for our children, and, by extension, for our future. Various investment options are available within these savings profiles, and the PROFIT savings profile can be linked to our sustainable Tomorrow Invest investment plan. Under this plan, we invest in a selection of listed companies that will have a significant impact on society and the economy in the future, choosing them with an eye to sustainability-related criteria.
Burim: As little as CHF 50 per payment. Combining a bank account and an insurance policy can also be a good option, enabling you to invest a minimum amount in the KIDS insurance plan for children and also have a bank account into which you can flexibly make further payments.
Burim Muji
Product Management Life Expert