Securing one´s child´s future

What happens to the child if we disappear - who will take care of her? What happens to the child if one parent is disabled and your income drops significantly - can you keep your home? What if the baby has an accident and becomes paralysed? The chances of any of this happening are fortunately very small. But if an accident does happen, the consequences are serious and it is important to have thought about these things. We have looked into the need or not for child insurance as well as life and disability insurance for ourselves, and the need or not for a will, and we thought we would share what we have found. Don´t hesitate to send me your own comments and experiences!

Do you need a will?

• Who will take over custody if both parents die?
  

If the worst should happen - that both parents die, what happens to the children, according to Norwegian law?

It is the local court (Tingretten) that will decide who gets custody of the children should both parents die. Those who want to claim the parental responsibility must therefore notify the court. If only one person or family does so, they should get custody unless the court suspects that the child would not get "proper care and education" with them. Other family members can be heard, as well as the child itself if he/she is more than 7 years old. If several people claim the parental responsibility, the court chooses between them. If no one claims it, the case is transferred to the Child Welfare Services. Read more in the Children Act Section 63.

It's probably important to have thought through who you would want to be your child´s legal guardian should you pass away, and talk to the families on both sides about the decision. If you don´t, you will risk that more than one person/family claims custody and there may be a discord between the families. Also, those who aren´t chosen might feel hurt if they discover it after the fact. It is furthermore important to ensure that the family who does get custody makes sure that the child keeps in touch with the family of the other deceased parent. This is especially important if they live elsewhere, perhaps even in another country.

It may be helpful to have a written statement, in connection with a will, that clarifies who you want to take over parental responsibility and the obligations that comes with it (eg. visit to the other's family, etc). In Oslo one can keep the will and this Statement at the Oslo City Recorder. If the parents of a child die, the Court will first of all check here to see if the deceased had a will, and so far as possible, respect the wishes stated in the will. By having such a will and declaration, you will be able to save a lot of time for the court when deciding on custody.

Read more here.

• Who inherits when a parent dies?
  

According to Norwegian law, if there is no written will, 1/4 of the inheritance goes to the spouse (minimum 4G) and the rest is divided equally to each child. See the Norwegian Inheritance Law for more information.

If the child is under age, the Norwegian Overformynderiet (Public Trustee´s Office) manages his/her money if it exceeds 75 000 NOK. Your child will have a guardian (whoever is left with parental responsibility) who will represent the child vis-à-vis the Overformynderiet. 

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Life and Disability Insurance

If you have children, you should consider buying disability and life insurance so that an accident or illness, or even worse - death, does not lead to a large loss of income to the extent where you´re struggling to make ends meet. The worst thing for a child may be that you can no longer afford to keep your home and the family must move and change nursery or school.

Disability Insurance
The most important insurance is the disability insurance. If an accident occurs and you become disabled (unable to work, whatever the reason is), you will according to Dine Penger only receive between 50 and 60/70% of your wage in disability benefits. It goes without saying that this can make it difficult to maintain your standard of living and your house. At the same time the Norwegian State gives you a supplement for each child you have and you will pay less in taxes. I therefore recommend that you contact NAV and ask them directly how much you would receive should you become partly or totally unable to work. Disability insurance is expensive, and it may be worth looking into your finances and find out if your family would be fine without such an insurance. Some considerations:

• In 2010, 43.1% of the Norwegian population were disabled at the age of 67 (retirement). 48% of them were women. The chances that you will become disabled are thus relatively big.
  
• Disability insurance is important in a certain phase of life - when you have children that depend on you. Once the children have moved out of the house, a loss of income wouldn´t have as big of a consequence on your entire family. 
  
• If you work in the private sector you get on average 50-60% of your salary in disability pension from the National Insurance Scheme (Folketrygden) + a child supplement + any arrangements with your job. Read more on NAV pages. You will probably also pay less taxes. Note: The higher the salary, the greater the income loss.
  
• If you work in the public sector, you get 66% of your income + a child supplement (10% of the pension per child), assuming full contribution period (30 years - the years from when you become disabled until the age limit for the position are included in the vesting period). Read more on the pages of the National Public Service Pension Fund (SPK). You will probably also pay less taxes. This is a very satisfactory arrangement.
  
• I would recommend that you contact NAV / SPK to ask them for a calculation of what you would get gross per month, and that you ask your employer about special arrangements at your workplace.
  
• Let's say you would have a monthly loss of income of 6000 NOK. You should then ask yourself the following questions: Could we still manage? If not, how much would we need? Let's say you would manage with an income loss of 3000 NOK a month. If so, you can get a disability insurance policy that would give you 3000 NOK extra a month in addition to the disability pension from NAV.
  
• Note: It´s best to get a disability insurance while you are still young and in good health!
  

Life Insurance
Life insurance, which is an amount of money your partner gets if you were to pass away, is something to consider if you have kids and a great deal of debt that would be difficult for your partner to pay down alone. A life insurance costs around NOK 100 / month for a payment of NOK 1 million. NOTE: Many people have life insurance through their employer or union.
When you consider buying a life insurance, you should ask yourself these questions:

• Can my family keep the house if I die?
  
• Would my partner be able to pay out my children - and the inheritance tax?
  
• Are my children secured a safe financial upbringing even if I die?
  

Read more about what insurances you should have here (in Norwegian).

Child insurance

Most of us are skeptical of insurance companies. They seem cynical and play on our emotions and fears. We also trust that the Norwegian welfare state will be there for us should anything happen. So do we really need a child insurance? We looked into it and here is what we found out.

Some considerations:

• Nearly half of all Norwegian children are insured.
  
• A good child insurance costs approx. 150 kr a month.
  
• From the Ministry of Children, Equality and Social Inclusion´s website: There are two main types of child insurance: A simple and affordable child accident insurance that covers medical expenses and provides compensation for medical disability due to an accident. It does not require health information to purchase this type of insurance. The other main type is a more comprehensive and more expensive child insurance which covers accidents and illnesses. Health information is usually required to purchase this type of insurance. It is worth noting that two out of three payments related to child insurances are for illnesses.
  
• The Norwegian National Insurance Scheme (Folketrygden) will always provide certain basic benefits if your child were to be injured in an accident, become seriously ill or be born with a disability, the purpose of which is to compensate for parents' income loss. The aim of a child insurance is to get more money and faster payouts. Look at these concrete examples (in Norwegian). Here are some more:
  
• Example 1: Your child ends up in a wheelchair. You need to adapt your home for the wheelchair and maybe buy a new car. Government funding will be available, but it may take time to get the disbursement and you may have to fight the system. A good child insurance will quickly pay out a lump sum which allows you to quickly adapt to your new challenges and focus on the child.
  
• Example 2: Your child becomes partly disabled due to an accident or illness. Since the child has not been able to obtain pension rights beyond basic pension, the child will receive as an adult the minimum disability pension, which currently rounds up to about 200 000 NOK a year. Storebrand, for instance, adds 1G (82 000 NOK) a year until retirement age (40 years).
  
• If you decide to buy a child insurance, you should do it as early as possible, before the child has developed any illnesses that can affect the insurance. Some insurance companies let you keep the child insurance until the child is 18 years under the same conditions as when you bought the insurance, and at the age of 18, the child may decide to continue the insurance as a disability insurance, as well as under the same conditions as the child insurance, even if the child in the meantime has developed some physical or mental problems.
  
• The best alternative to a child insurance is to have good finances and savings. 

Finance Norway gives a very good overview of child insurance vs. the public. See the main page and the links to the left. (In Norwegian)

What you should consider before buying insurance
(From the pages of the Ministry of Children, Equality and Social Welfare):

• What is already covered by the public and the parent´s travel and / or accident insurance?
  
• Is your child a member of an association or a sports team who have insurance?
  
• How long do I want my child to be insured?
  
• What needs do we have / what should we include in an insurance? Our own income loss or our child's financial future or maybe both? Adapting our house to a wheelchair etc.
  
• What exceptions apply in the various child insurances?
  
• What are the payment rates and how much is the maximum compensation paid to a child who is 100 percent medically invalid or 100 percent disabled?
  
• How much should and can I pay for a child insurance? Is it more profitable to put money in mutual funds?
  

Which insurance company should you choose?
Norwegian Family Finances have tested the insurance companies and the winners are Storebrand, Gjensidige, If and Frende.

In the magazine Foreldre og Barn´s test the winner is Frende.

In the magazine Dine Penger's test from January 2013, the Storebrand child insurance is labelled the best.

Checkpoints when choosing an insurance

• The insurance should cover both illness and accident.
  
• Disability coverage should cover both a lump sum payout and a yearly supplement from 50% disability upward. Do you get paid when diagnosed or when declared permanently disabled (best when diagnosed!)?
  
• Does the insurance also cover mental illnesses?
  
• Payment for medical disability
  
• Payment for selected diseases, such as cancer and diabetes. The amounts vary from 150 000 NOK to 328 000 NOK between the various companies.

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