This week I (Aaron Pace) decided to do my blog post on life insurance for children. As I was doing my research on the subject I was surprised that there are people who actually do not think it’s a good idea. I understand their argument, that life insurance is to replace lost income of a spouse or parent and a child doesn’t have income. One economist even went so far as to say that if a child passes the family would have more money once the funeral was paid for because the family no longer has to pay the expenses of raising that child and future college expenses, wedding etc.
I was taken back when reading that. I feel he has missed the big picture. I think of it this way ….. If my son would have passed away when he was younger there WOULD have been a loss of income – I would have been devastated to the point I would not have been able to get out of bed.
Furthermore, who knows how long it would have taken me to get back to work after experiencing such a loss. Life Insurance is not all about the money, its about easing the pain, giving us time to grieve, allowing us to return to work on our time, not that of our pocket book. Allowing us the opportunity to honor our child to the fullest.
This being said, I do agree with the idea of making sure the parents are insured / covered first. It is obvious that losing either source of income would put the family in a financial bind. Most families build a life style around dual incomes, if you lose one of those incomes and compound that on top of losing the family member…. lets just say in my opinion, it would be devastating (Sorry kids, I know you just lost your mother, but I’m going to also need you to move out of your house, forget going to college, and um ya those iPhones gonna have to turn them off).
My belief / recommendation – If there is money left over in the budget after your bills are paid, and life insurance is already in place for the parents I strongly recommend a policy for your children. My thought process behind this 1. the premium for a child is relatively low 2. it is usually guaranteed renewable meaning if health conditions develop (making them uninsurable) as they are growing up they have the opportunity to continue the policy when they may not be able to get additional coverage 3. Whole life policies can build cash value 4. if there is a tragic loss the family will be able to cover final expenses & medical bills 5. Hopefully it will get the child started in the right direction helping them understand the reason to be properly covered to protect their future families.
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