The idea of buying life insurance on your child can be scary. It makes you think (at least momentarily) that your child may someday die.
That is a horrible thought.
If you don’t think about the possibility- then it can’t possibly ever happen- right?
Tell that the parents of the 8 children (aged 0-14) that die in the US each hour.
That is two every 15 minutes. And that doesn’t even take into account children ages 15-18. When they get their driver’s license! I won’t even get into those stats!!
The leading causes of death for children ages 1-4: Accidents, chromosomal abnormalities, and homicide. How about for ages 5-14? Accidents, cancer, and intentional self-harm (suicide).
Moms and dads… we cannot protect our children from everything. As much as we want to and think we can.
Life insurance on children gets a bad rap because some people see it as a way to “profit” from your child passing away. Honestly, you just can’t think that way!
Here are 15 reasons why buying life insurance is just a smart idea and in no way “profiting” from your child passing away.
1. If something were to happen to my children, I would be a wreck. I mean an honest-to-God wreck. Most employers give maybe a week of paid bereavement for a child. Then you may get to use your FMLA or PTO time. (If you have PTO left or get PTO in the first place). But… FMLA is not paid time. I can’t afford to work very long without getting paid. I know they always “told” me that I should build up a six-month nest egg in the bank, but nope- never happened. I mean, I had kids!!
The first week I’m going to be planning the funeral. I’m not going to be working the second week. Okay- let’s be real… I’ve never done this before- but the first month? Maybe. I would need to talk to someone who has gone through this before- but I just can’t imagine HAVING to go back to work. It would be nice to be able to ease my way back into things if I needed some extra time.
It would be nice to know that you don’t have a timetable for your grief.
2. What if I had to spend some of that PTO or FMLA time in the hospital prior to my child passing? Then afterward- there REALLY wasn’t any time left in the pot. Life insurance can be used to keep the household afloat while I am not working. While my husband is not working.
3. Final expenses can easily top $10,000. Let’s be honest- do you have $10,000 in savings to pay for your child’s casket, grave site, memorial, and funeral costs? Are you in a position to write a check for this? Go Fund Me is not the answer!!! Please do not rely on complete strangers to pay for your child’s funeral and burial.
4. If you have family members that are far away, you could use the life insurance money to help them travel to visit you. Maybe grandma needs to come up to spend a month helping you mourn your loss and travel expenses weren’t in the budget. Life insurance would make this an easy expense to pay.
5. I would likely need some therapy if I lost a child. I think my other children would likely need some therapy. Maybe our family would need some family counseling sessions. If your health insurance doesn’t fully cover what you need, your life insurance would be able to pay anything you need.
6. Again… time. If you work, you will likely need some extra time off during that first year. Those days during the first year when you need a time out. Your child’s birthday or the anniversary of the date your child became an angel. These dates usually bring deep emotional distress for parents who have experienced a loss. There may also be other days you need some time off of work. Depending on your employer, you may not get paid for this time off. Life insurance would make up for this loss of income.
Those are the “sad” reasons… Let’s get to some of the reasons that don’t involve imagining your child passing away.
7. Your child may develop a condition that prevents him or her from getting insurance in the future – or make insurance very expensive! When you buy insurance on a child- it is not medically underwritten (meaning there is no medical exam- they are guaranteed insurance). But as we all know- as adults- that is not the case. They will have the policy for life. Despite the fact that they could possibly get cancer, depression, juvenile diabetes, become overweight, etc.
8. Most children are not smokers either. But when they grow up they might be. This is just another example of guaranteed insurability (above). Tobacco use doesn’t make you uninsurable as an adult- but it can double the rates you pay! Marijuana use typically puts you in a higher rate class as well. Harder drugs can make you permanently uninsurable. Insuring your child as a juvenile will guarantee coverage as an adult.
9. Some life insurance policies have living benefits riders. If your child- at any time they have this policy- as a juvenile or adult- is diagnosed with a terminal disease and has less than a year to live, a portion (usually between 70-90%) of the policy’s value may be able to be used for things like experimental treatment, hospice care, etc.
10. If your child does, at any time, develop a terminal or chronic condition, they might- depending on the life insurance policy you purchase for them, have access to a portion of the funds. Some people use these funds because their illness has caused them severe financial hardship and some people use these funds to fulfill their final bucket list- since the qualifying condition of the accelerated benefits rider is a medical condition that limits a person’s life span to less than 24 months.
11. Did you know that your Motor Vehicle Report is used to assess your risk for life insurance? The more accidents you have the more expensive your life insurance is going to cost. Apparently, you are more riskier and therefore, they think there is more likelier to be an earlier payout if you are an unsafe driver… Once your child turns 16- how likely is it that he or she is going to have a spotless driving record? But how many 6 year olds have a lengthy MVR?
12. What is your child going to be “into” as an adult? A pilot? Avid scuba diver? Travel the world and help needy children? We want our children to know that sky is the limit! But insurance companies tend to get nervous with these types of activities and these can affect rates and possibility of insurability when the policy is purchased as an adult. If coverage is purchased as a minor, these types of activities are immaterial.
13. You can avoid nagging your child while they are in their 20’s! Most people won’t buy life insurance while they are in their 20’s no matter what you say to them. They just have this idea that they will live forever. But as a parent- you will be there, on the other end of the phone, nagging them to buy life insurance- especially if they have a child or two! If you have bought life insurance for them as a child, you can feel a sigh of relief that at least they have something no matter what. Their spouse and children will thank you!
14. Depending on the type of policy you purchase- some grow cash value. You can borrow against a life insurance policy’s cash value (be aware that the loan might affect the policy’s longevity) to help finance college or a wedding or other needs.
15. Charitable Giving. This is a big IF- but if you were really worried about coming off as “profiting” from life insurance on your child- you could donate whatever you didn’t need afterward. You may decide that the best way to honor your child is to use their memory in a foundation or to help another foundation
In conclusion, buying life insurance for your child is a smart decision for your child’s future. First and foremost- think of it as an investment for your child. You are giving them a gift.. for so many reasons. Second, you are protecting yourself if something (heaven forbid) does go wrong. Accidents happen, people do get sick- and as much as we would like to think it could never happen in our own family- it really could. Juvenile life insurance is the least expensive life insurance to purchase; so if you are able to- it’s a great investment to add to your family budget.
There are two ways that you can purchase a life insurance policy for your child. You can purchase life insurance as a standalone policy for your child or you can add on children as a rider to an existing life insurance policy that you own. Keep in mind that many of the reasons on this list may only be available on particular types of insurance.
Your trusted advisor will be able to help you navigate the life insurance waters.