It is one of the joys of being a kid – you get to spend time running, jumping,
climbing and playing, whether in the schoolyard, at the park or on holiday.
The downside is that children are always falling down and hurting
themselves, resulting in grazed knees and broken limbs. Thankfully, of the
40,000 children hospitalised each year after playground accidents, most are
not seriously injured and the financial consequences for parents turn out to
be minimal.
In some cases, however, more serious injuries occur. With this in mind, a
handful of insurance companies offer cover for parents who are worried about
the possible financial implications of injury to a child. For instance, in
case of severe injury, a child may be disabled and require constant care,
while the home may have to be altered to accommodate the disability. In some
cases, one parent will resign from work, adding to the financial strain.
Specialist child accident policies pay a lump sum to cover such costs, with
payouts of as much as £500,000 for the most serious injuries. The policies
will pay out if a child sustains permant injury, such as the loss of a limb
or blindness, but they do not cover less serious accidents.
For minor injuries that do not result in permanent disability, parents must
rely on the National Health Service or private medical insurance. The latter
is generally not available for children, but they can be covered under their
parents’ policy. An adult’s private health policy with BUPA, costing about
£40 a month, would require an additional premium of up to £14 a month to
include a child as well.
A specialist child accident policy can cost up to £240 a year for 24-hour
cover, including accidents at school, nursery or similar preschool groups,
at home and while playing most sports. There are cheaper policies that cover
a child only while at school. Some independent schools require pupils to be
individually insured so that they are covered while playing sport or on
school excursions. SFS Group, a specialist broker, offers school-only cover
through Red Star, from £7.50 a term.
Cheap 24-hour child accident policies are also widely available. However,
parents should check the small print because some exclude a wide range of
“hazardous” sports in which many children participate.
Russell Scanlan, a broker, has a scheme with premiums at £30 a year for one
child, £50 for two children, and £70 for three or more. The policy,
underwritten by Groupama Insurance, covers children from 1 to 18 and pays a
lump sum of up to £200,000 in the event of a serious injury that causes
permanent disability. However, an unusually wide range of sports is
excluded, including skiing, hunting, shooting, equestrian sports (other than
gymkhana and pony club events), diving, boxing, wrestling, mountaineering
and rugby. Roger Cawkwell, of Russell Scanlan, says that specific policies
have been tailored to individual children to cover such sports, but this is
likely to cost more.
A more expensive option is the Tots to Teens policy from Norwich Union Direct.
As well as 24-hour cover, the policy offers parents access to a 24-hour GP
advice line and a separate legal advice line. The premiums are about £240 a
year per child and the policy covers all sports, except motorcycle riding.
In addition to the usual lump-sum payout for permanent injury, parents
receive a £250 payment for less serious injuries where surgery is needed.
A Norwich Union spokeswoman says: “The legal advice line gives advice in cases
such as where a child is being bullied, while the £250 payout can be used by
parents to buy their child a toy. However, this policy is not meant to
replace private medical cover, public liability insurance or the NHS – it
compliments other insurance with a nest egg to fall back on should the
unthinkable happen.”
Experts are divided over whether child accident insurance is necessary.
Richard Mason, of Moneysupermarket.com, the comparison website, says that
parents should weigh up whether it is worth the cost to insure their
children separately. He says: “Parents tend to rely on household insurance,
which covers children when they have an accident away from the home.
Specialist accident cover for children, along with kidnapping insurance, are
still very niche products.”
However, Steve Foulsham, of the British Insurance Brokers’ Association, says
that parents should not rely on household insurance to pay out if their
child is injured. Furthermore, while schools and private and council-run
playgrounds tend to be covered by public liability insurance, parents may
find that they are not able to rely on these policies either.
Mr Foulsham points to figures from the Royal Society for the Prevention of
Accidents, which show that three million children a year suffer injuries
that require attendance at the A&E department of a hospital. Of these,
one million are injured in and around schools, recreational areas and sports
facilities and two million in and around the home.
Mr Foulsham says: “Household policies and personal liability insurance taken
out by schools and playgrounds only cover accidents where the person or
organisation in charge has failed to take proper steps to ensure the child’s
safety. If there is no sign of negligence, parents will not be entitled to
any financial compensation. That’s where the value in these additional
policies lies – as long as you’ve suffered the injury, that policy should
pay out.”
Why some kids are top of the class for Child Trust Funds
The first children to receive the Government’s Child Trust Fund (CTF) vouchers
will start school next week, but some will be better off than others, Rebecca
O’Connor writes.
When the scheme started in April 2005, the Government paid children born
between September 2002 and April 2003 £277 each. However, today’s
five-year-olds whose parents did not make additional contributions will have
a far smaller savings pot than those whose parents have made regular
contributions since making the original investment, says Nationwide Building
Society.
A £277 voucher invested in a cash CTF with an interest rate of 7.25 per cent
is now worth £319 without any additional contributions. In an equity fund,
the same pot is worth £375. Equity CTFs that are linked to the performance
of the stock market have performed better than cash funds since the scheme
began, although they are more risky.
Parents who have made additional monthly contributions have made sure that
their kids will be top of the class for their CTF. Those whose parents have
paid in an extra £20 a month will have a savings pot of £945 in cash, or
£1,027 in the equity fund. Children whose parents have paid in the maximum
of £1,200 a year will now have amassed a nest egg worth a massive £4,242 in
cash, or £4,489 in an equity fund.
By the time the children turn 18, the gap will have widened. The starting
balance of £277 will grow to about £1,300 in a cash fund if no further
payments are made. But the pot would rise to £7,676 with monthly payments of
£20 and £34,985 with payments of £100 a month.
Interest rates on some cash accounts have been rising over recent months.
Britannia Building Society now pays 7.5 per cent on its CTF, including a
bonus of 1.25 percentage points for the first two years. Yorkshire Building
Society pays 7.3 per cent, with a bonus of 0.7 points for 12 months.
CASE STUDY
Dominic Cornelius, left, enjoys playing rugby at school several times a week.
But as healthy as the 14-year-old may seem, his father, William, believes
that it is best to be prepared financially if an accident were to happen. It
is for this reason that Mr Cornelius has purchased specialist child accident
insurance for all his four sons when they turned 13.
The policy, arranged through SFS Group, a specialist broker, provides cover
while the children are at school until the time they graduate.
While some independent schools demand that parents insure their children,
Dominic’s does not. Nonetheless, despite the premiums of £7.50 per term for
each child – a total of £450 for all four over the course of their school
careers – Mr Cornelius says that the added expense provides peace of mind.
He says: “It is horrible to think about needing insurance, but I have it to
protect our home in case there is a burglary or a flood, and children are
somewhat more precious. You can’t replace their limbs but you can make life
easier for them. I have insurance so I can sleep at night.”
