My experience is that there is actually a mindset, especially with parents, that if they carry life insurance on their child they could somehow increase that child’s chance of an early death. Let me assure you that there is no statistical link between a child’s mortality and whether or not they had a reasonable amount of life insurance.
Why carry juvenile life insurance? The first reason, the one most parents don’t want to think about, is that even though the chances are very small, occasionally a child will die prematurely. While we all say that we can probably scrape together the money it takes to pay final and burial expenses, the truth is that is the purpose of life insurance. There is a very good chance that a child’s untimely death will be far more expensive than you would have ever imagined, and a small insurance policy is only going to help defray those expenses, not pay them in full.
Now back to the greater value of life insurance for children. Now that we have gotten over the bump of dealing with the thought that a child might die prematurely, here’s the reality. They probably won’t!
The greater value, the gift in a child’s insurance policy, is the fact that it generally is guaranteed issue life insurance so getting it is not a traumatic event and the policy will generally guarantee the child’s insurability as an adult. I worked with a 22 year old client the other day who had battled leukemia through his teenage years. It appears he has won that battle, but $100,000 of term life insurance is going to cost $1200 a year. If his parents had bought the right policy when he was young, his insurability would have been guaranteed at a rate that would have allowed him to have a universal life policy for about $200 a year. He is an adult paying for his own insurance, and the gift of juvenile life insurance, whether purchased by his parents or grandparents, could be saving him $1000 per year now. It would save money and give him permanent instead of term insurance. That is huge!!!!!
Parents and grandparents. Give the gift of life insurance!
This post is somewhat dated. Life insurance underwriting is changing and evolving continually. For more updated information check out some of the key word links. If you have a specific question or topic you need information for do a search. If you don’t find the answers you need contact me and we’ll make sure you get the information that is important to you.
[...] that guaranteeing a child’s insurability is worth something. In a post some time ago I made my case for children’s [...]