Certainly, almost every parent agrees, when discussing life insurance for children, it is an uncomfortable topic. However, we’ve been asked numerous times, “What’s the best life insurance for children?” when talking about life insurance with parents.
The most accurate reply is, it’s completely situational.
Some parents utilize it, some don’t. Certain parents are totally against purchasing life insurance for children for personal reasons. I’ve had a mother go into a rage just for bringing up the topic of life insurance on her child. Every parent is different and not everyone has the same life insurance needs. It is important that you choose insurance protection for your loved ones that fit your family’s needs and budget. There are no “one plan fits all” policies. What works for you may not work for your sister’s family. You’ll need to look at your specific preferences and select the plans that meet your needs. Not only that, but you’ll need to get quality insurance at an affordable rate that doesn’t break your budget.
Life insurance for children is a very difficult topic to discuss. However, it may be a very important one. You should always protect every major area of your life. If something tragic were to happen to one of your children, the emotional trauma alone will be devastating. Adding financial stress to the situation often can be too much to handle. Not too many of us have $10,000 in cash sitting around to pay for a funeral.
So, let’s look at the pro’s and con’s of life insurance on children. Be aware, there is a limit to the amount of life insurance you may purchase on your child. The “financial need” of having life insurance on your child will be reviewed by the underwriter.
The Best Life Insurance for Children
First off, am mentioned, this can be an uncomfortable topic for some, as it infers a child’s death. Although it’s a very tough thing to even think about, it does happen, and can cause a tremendous financial hardship to a family. Of course we recognize the emotional devastation of losing a child.
I come from a large family and have seen firsthand the devastating effects of losing a child. The life changing emotional loss is one of the saddest things I had to witness for my brother and his family. The setbacks it can create both in your personal life and financial life are too many to list here. I’m sure every parent in the universe would believe they should never have to bury their own child. While I agree completely, reality tells us a lot of parents have to deal with the opposite every day.
Here are the three most common objections we hear from parents:
- I’m not looking to get rich off my child’s death.
- I feel like it’s bad karma to insure my kid’s life.
- My child produces no income. What’s the point?
Let’s discuss each point.
I’m not looking to get rich off my child’s death.
Nobody thinks you’re buying life insurance to become rich. It’s obvious you aren’t. It’s called insurance because it’s “just in case” a terrible event happens, not because you’re looking to make money. This would be like saying you would refuse to buy homeowner’s insurance because you’re not looking to get rich off your house if it burns to the ground. If your child predeceases you, there are expenses involved, and the life insurance is to pay for these expenses so you don’t have to worry about the bill while you grieve. It really is as basic as that. Funeral expenses can run over $10,000. That is a lot of cash that many of us do not have lying around.
I feel like it’s bad karma to insure my kid’s life.
This one is the most illogical of the bunch. Simply owning insurance does not increase the chances of your child’s death. Life insurance is to protect you from financial burden, nothing else. If your child was learning to ride a bike, and you denied them a helmet because you thought it was bad karma they would fall, are you doing anyone a service or disservice if they get hurt? Superstitions will not help you pay the numerous bills in the untimely passing of your child.
My child produces no income. What’s the point?
This is a well thought out response. If life insurance is to pay debts or replace income, and a child has neither, why do you need life insurance? Well, as we mentioned, there are still some large expenses if a child dies. A funeral, a casket, possible medical bills, travel, and other things, too. The best life insurance for a child is a policy which covers these expenses. You will agree, the financial side of death is not where your focus ought to be if something were to happen to your child.
Reasons Not to Buy Life Insurance on Your Children
I do, of course, recognize sometimes the best life insurance for children is none at all. So, what are the situations where life insurance is not necessary for your children?
- You have the cash.*
- Your child can get their own.
- It truly makes you uncomfortable.
If you have the cash, you may not need to consider life insurance for you children. Remember, the most important purpose for life insurance is to instantly create cash when needed, for a specific purpose. If you can earmark your dollars specifically for this purpose, or you have a surplus where you can draw from, perhaps you don’t need life insurance.
*Remember, insurance is still the best way to leverage your money. If you simply added your child as a rider on your own policy, the net cost would be drastically reduced.
Although this rarely occurs, if your child is old enough to work and earn income, even if it’s fun money, then they ought to buy their own. Not only could you instill a learning opportunity here, but you can also put your mind at ease for not having to be the owner of your child’s life insurance policy. Again, this does not happen very often.
If owning life insurance on your child truly makes you uncomfortable, and you absolutely can’t wrap your head around the financial side of leveraging your money for an emergency such as this, then don’t buy life insurance. But, at least have some sort of plan in place for what you might do if tragedy did strike. It’s like drafting a will. Absolutely nobody on earth would think it’s fun, but it’s a necessary step when you have family members relying on you.
Key Point to Remember About Children’s Life Insurance
If you’re really taking the time to consider all the possibilities of what life insurance can do, the best life insurance for children is the kind they won’t have to worry about later.
Here’s an example.
Bobby, at age 17, was diagnosed with cancer. Luckily, he was able to undergo experimental treatment over the next three years which saved his life. At age 25, he married, had two children, a good job, and was living the American Dream. When sitting with their financial planner, Bobby and his wife discovered they had a great need for life insurance to protect themselves and their children. Unfortunately, because of Bobby’s health history, he was not able to buy life insurance. Tragically, he was killed in a car wreck at 27 and left behind his wife and children without the income they surely needed.
Even though his death was completely unrelated to the disease he battled, he couldn’t find coverage when he applied.
This could have been avoided if Bobby’s parents had simply added their son on as a rider to their own policy at any age. As a child ages, most insurance companies will allow your child to convert the term rider into a stand-alone insurance policy of their own. In some cases, a company could even offer to multiply the original life coverage by 10 times!
How Much Does Life Insurance Cost for Children?
While securing life insurance for your children can be an emotional challenge, it certainly will not be a financial one. It’s very cheap to buy life insurance coverage for your children. Every insurance company is going to offer a child rider that you can add-on to your life insurance plan that you already have in place. If you do not have life insurance currently, there are policies available to purchase only on your child’s life.
When you’re looking to add life insurance coverage for your child, you can typically do that with just a few dollars every month and it will give you the protection that you need to cover funeral expenses. With the cost so low to add your child to your policy, it truly makes sense to avoid the financial stress should the unexpected happen. It’s a wise decision to add a few dollars to your current insurance policy premium to secure additional coverage on your kids.
If you have questions about the best life insurance for your children, contact us today at 1.800.277.3098 and we’d be happy to walk you through your options.
It can be difficult to find the perfect insurance plan for both you and your children, but it doesn’t have to be. Our agents can help connect you with the best insurance plan to give your family the protection that they need.
Nobody wants to think about anything tragic happen to either yourself or your loved ones, but not planning for the worst could leave your loved ones with a massive amount of debt and other bills. Don’t wait any longer to get the insurance coverage that your loved ones are going to need.
Additionally, if you’re looking to get more affordable coverage for yourself, our agents can help you do that. We can help you save hundreds of dollars on your life insurance plan. It’s important that your family has the insurance protection that they need, but your plan shouldn’t break your bank every month. Contact us today and we can save you money.