With foresight into the future: Everything important about child insurance
Children cannot take care of themselves yet.
Children need protection and security in case of emergencies. Child insurances are a sensible precautionary measure in this regard. Philippe Muntwyler is a co-founder of Caveo and an expert in the development of modern precautionary tools and products. In the interview, he explains why child insurance makes sense and what advantages it offers compared to saving in a bank account.
Philippe, what benefits do children and adolescents receive if they suffer from disability due to illness or accident?
Philippe: In general, children and adolescents are supported through medical measures and vocational reintegration measures, disability benefits, intensive care supplements, assistance contributions, and the provision of aids.
What medical benefits does the disability insurance (IV) cover?
The IV covers all necessary medical measures for the treatment of congenital defects, regardless of future earning capacity. The recognized conditions considered as congenital defects, which qualify for IV benefits, are exhaustively listed in a regulation. More details can be found in the regulation at: SR 831.232.21 - Verordnung vom 9. Dezember 1985 über Geburtsgebrechen (GgV) (admin.ch)
The IV also covers the costs of medical measures that are directly aimed at integration into compulsory school, initial vocational training, or working life.
Alright. Philippe, when is my child entitled to a disability benefit?
If a child is permanently reliant on the assistance of others for various everyday activities (dressing, getting up, eating, personal hygiene, etc.), a disability benefit from the IV can be applied for. The entitlement is assessed in comparison to the support needs of healthy children of the same age. The amount of the benefit depends on the degree of disability (mild, moderate, severe). The disability benefit is provided for each day spent at home. If a child stays in a care facility, parents are only entitled to a disability benefit if they cover the costs of the stay themselves.
As parents of an eligible child, you must submit the compensation claim for your child every three months using Form 318.632.2 - Invoice for Disability Benefit for Minors.
The entitlement arises after the requirements have been met for one year and the disability continues. For infants in the first year of life, the entitlement arises immediately if the disability is expected to last for more than twelve months. From the 18th birthday onwards, the requirements for entitlement to a disability benefit for adults are assessed. More information can be found in the information sheet: 4.13.d (ahv-iv.ch)
And when is a child entitled to a disability pension and supplementary benefits?
The entitlement to a disability pension arises no earlier than the month following the 18th birthday. The entitlement to supplementary benefits arises no earlier than the month following the 18th birthday or the entitlement to a pension.
Well, that all sounds very complicated and involved. How can I privately insure the 'risk' of disability for my child?
Philippe: First and foremost, it should be noted that according to the IV statistics from the year 2020 (Federal Social Insurance Office), 5.2% of children aged 0 to 4 and 8.5% of those aged 15 to 19 are affected. The main causes of disability in children and adolescents can be listed as follows:
- 13% congenital defects
- 49% mental illnesses
- 32% diseases
- 6% accidents
Based on this knowledge, it makes sense in my view to consider insuring against the risk of disability through a child insurance policy.
Philippe, please explain briefly: What is child insurance?
Philippe: Child insurance provides comprehensive protection for your child. On one hand, it safeguards against unforeseen events like illnesses or accidents and their associated financial impacts. On the other hand, it also allows for the accumulation of capital to provide a solid start to your child's adulthood.
Your advice as a precautionary expert: How can one optimally provide for children?
Philippe: Children are not adequately protected against the financial impacts of disability. Hence, it's particularly important to establish additional safeguards for them. I recommend obtaining an occupational disability pension, which ensures additional income for your child.
To accumulate capital, it's advisable to start saving early. Let's imagine your savings goal is CHF 30,000. To achieve this goal in twenty years, you would need to set aside CHF 1,500 each year. If you aim to reach the savings goal in ten years, an annual contribution of CHF 3,000 would be required.
Another option is to save in cost-effective investment funds. I recommend investing in such funds (ETFs) from the birth of your child instead of a traditional account. As we know, the compound interest effect significantly aids in building the desired sum.
My personal tip for all parents:
Finally, you can also utilize child allowances, if your financial situation allows it and you don't need the allowances for everyday expenses like clothing or diapers. Of course, it's important to consider the method of saving money individually in each case.
In summary, remember these 3 tips:
Tip 1: Start saving early.
Tip 2: Opt for cost-effective investment funds.
Tip 3: Use child allowances if financially feasible.
What advantages do you see in child insurance compared to a bank fund savings plan?
Philippe: In my view, the biggest advantage of child insurance lies in its comprehensive protection for the child. Compared to saving at a bank, child insurance offers assured capital accumulation. Thanks to premium waivers, the savings goal can be reached with insurance in any case. If a parent becomes occupationally disabled or passes away, the insurance covers the necessary premium payments.
What benefits are included in child insurances and what should one look out for?
Philippe: The benefits of a child insurance can vary depending on the provider. However, safeguarding and capital accumulation should be included in a child insurance – that's crucial. Additionally, it's important to pay attention to the insurance conditions, such as which events are exactly covered and if there are any exclusions. The duration and conditions of benefit provision should also be considered.
Who can take out child insurance?
Philippe: It's important to know that parents aren't necessarily the ones who have to take out child insurance. Other individuals like relatives, godparents, or godmothers can also do so. Of course, parents or legal representatives need to provide consent to ensure the child's well-being.
And finally: From what amount can one start with child provision?
Philippe: With many providers, you can start with as little as CHF 50 per contribution. A combination of insurance and a bank fund savings plan can also be sensible. This way, you can invest the minimum amount in child provision (insurance) and make flexible additional contributions to your bank account or portfolio.
Confused? 😊 No problem. Simply book a non-binding consultation appointment (video call) here, where you can ask all your personal questions. We at Caveo are happy to help – straightforward, comprehensible, and evidence-based.