There’s always a lot of debate around the concept of buying life insurance on your child. Most people say that life insurance is only for protecting those who depend on you and your income. Of course a child has no one who depends on them. Or do they? You don’t depend on your child financially. That’s the argument. Unless your kid is a child movie star, they aren’t bringing in any real money to the family. So what is there to replace?
What is your favorite activity to do with your child? Maybe its reading a book, playing catch or beating them at checkers, we both know you don’t let them win. Who spends more time with your child? We know that someone has to work but the other spouse probably spends a lot of time watching, playing with and dragging your kid everywhere. The younger the child is the more time that needs to be spent with him or her. Would you notice if you woke up tomorrow and your child wasn’t around?
Obviously this wouldn’t cost you money, right? Well funerals aren’t cheap nowadays. How else would it affect you? I’m guessing your life would change pretty dramatically. Something tells me that you wouldn’t want to go to work. You probably wouldn’t even want to get out of bed and I don’t blame you, I know I wouldn’t. I’ve had the unfortunate experience of going through a miscarriage. I wouldn’t even wish that upon my worst enemy. I could never imagine what it would be like to lose a child.
What would force you to go back to work? I’m guessing the reason we all work, money. If money was tight you might be forced to get back to work as soon as you can or when your personal time runs out. It would be great to go on leave but you still need money. Wouldn’t a small life insurance policy help you make your own decisions? Isn’t that what it’s all about? You taking the time you need to figure out how to cope with a situation. Don’t let green stuff push you into something you are not ready for. Take out a small policy so that the choice is yours to make. For as little as $22/month you could get $50,000 of Whole Life insurance in MA.
While you are at it why not provide a benefit to your child? What if you could lock up their ability to get a lot more insurance in the future. There is a rider, or add-on, that provides the option to add insurance at future dates. This varies from company to company but usually starts around age 25 and then every 3 years you have the option to purchase more insurance up to around age 45. More importantly you can exercise your option at life changing events such as getting married or the birth/adoption of a child. All of this can be done with no underwriting. Let me repeat that, no underwriting, that means your child would be guaranteed the offer for coverage. For less than $3/month you could add the ability to lock in $800,000 of future insurance to the above mentioned Whole life insurance policy in MA. That sounds like a great gift.
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Great post this will really help me.
I’m not a big fan of insuring your child, but I realize many are split on this one. I’m in the camp of ‘insure only against financial loss you can’t afford’. The funeral is a good point of a large unexpected expense, though I would prefer to see an increased emergency fund using the money saved on premiums.
Tom:
Thank you for your input. It sounds like you are talking about building your emergency fund to self-insure? Have you ever thought of the impact of one of your children passing away? Can you put a dollar figure on that? Now do you have that money in an account that if you needed it all of a sudden you’d have it and it wouldn’t have a drastic effect on the rest of your financial world?