Many people find the idea life insuring their children a bit creepy and as the father of a four year old I confess I felt the same way, at first. But we don’t life insure our children because they are going to die, we life insurance them because they are going to live long and healthy lives.  We insure our children so that they can protect their children just like we protected them.

We do so much for our children, feed them, clothe them, buy them toys, take them to after school activities and love them to bits. One day our children will grow up and have a family of their own. Helping them get a head start and plan for their financial futures with life insurance is a low cost piece of financial planning you can start today and the younger the child the better because it is less expensive.

 I recently helped a young couple with their life insurance planning. They are in their 30’s and have a young son. We completed a standard “needs analysis” to determine how much life insurance each needed to protect their son’s future.  The father works outside the house and the mother is a homemaker.

What we discovered during the needs analysis was that there was already some personal life protection in place for the mother. As it turns out, her father had bought her a life insurance policy when she was a little girl. It was a whole life insurance policy, one where the premium does not increase and where a cash value grows over time. Her father owned the policy when she was a minor and he paid the premium. When she became an adult the ownership of the policy and its cash surrender value was transferred to her, tax-free.  

It was great to see this life insurance policy in place and unlike the toys or all the clothes the child received over her lifetime this is one gift the child never outgrew. With this insurance protection in place she needs to buy less additional protection thereby saving money for the family.

What if your child is uninsurable?

Some children sadly are born with congenital heart defects, (CHD), epilepsy, diabetes or contract early childhood diseases resulting in them being uninsurable.  To provide these children with insurance protection a parent can add a “child protection rider” to their own personal term or whole life insurance policy at the time of purchase.

 A child protection rider guarantees the child’s insurability. For example, if you purchase a child protection rider of $10,000 of coverage; this protection can be converted to five times the amount without any underwriting requirements when the child reaches adulthood. This is how you can give your child the gift of insurability.

We are fortunate to live in a country that has a medical system that can detect and treat illnesses quickly and effectively resulting in adults and children living long, healthy lives.  That said, it is important to protect yourself and your family from financial hardship by owning insurance and planning for the unexpected.