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1. Are You Financially Prepared To Face The Unthinkable?

Insurance is not all about death, but it is in death that an insurance prove its worth. Most parents can never really immensed themselves with the possibility of their child dying. Funeral cost starts today from $5,000 to as high as $20,000. It may likely to cost more in the future.

If you do not have emergency savings in the range of $10,000, you need to get at least the most basic insurance coverage policy that will pay at least $5,000. Bear in mind that you probably need more money than just to cover a funeral. Ideally, the sum can also cover unpaid leaves, one parent quitting to nurse a sick child and other contingencies, known as "cushioning" the effect.

2. Do You Have Reserved Funds To Give Your Child The Medical Attention He/She Need If Your Child Were To Get A Chronic Disease or Became Disabled?

Depending on the illness and condition of the child, the cost is rather difficult to estimate. Operation can cost tens of thousands if not hundreds of thousands, not inclusive of hospitalizations, therapies, medications and increased cost of everyday care.

This is the hardest part for parents and grandparents to decide on because a total life insurance including the complete health care and accident care policy will be five times the cost of a death coverage policy, yet they cannot take the chance of not covering their child.

To add or not to add, that is the question. When in doubt, get an option to purchase rider on top of the basic death-only coverage policy and upgrade the policy as your financial standing permits.

3. What Is Your Intention To Buy Insurance For Your Child?

If you answered "to protect against tragedy", go right ahead. If you answered "to give my child a head start", or "to save for her college", forget it. Insurance companies did a great job in coaxing customers about how insurance can be an investment tool.

The fact is, insurance is hardly the ideal investment vehicle to give you maximum returns. We have mutual funds, bonds and unit trusts to do that. An insurance is what it is - preparation for the worst. Get only what you need and do not be pursuaded to take a higher premium by the prospect of saving money. If your policy accumulated cash value, treat it like a bonus, rather than an investment goal.