I've been asked by another Dad I met my thoughts on insuring your children. He mentioned his advisor told him not to do so as they earned no income. True, but is that all the reason there is.
I shared my view that if you could, then you should and the reasons why I thought so which I will share a little later.
I've heard the argument from a family member that it is just wrong to "profit" from your child's death. I had an issue with child insurance being viewed that way and shared my thoughts. Here are several of the reasons I gave.
1. Most families would not only suffer a devastating emotional setback, but they could be financially challenged as well if they had to come up with funeral expenses. Though the cost may not be backbreaking, there is an impact. The additional impact is this......Could you see yourself going back to work immediately if you lost a child? What if you didn't want to but your situation did not allow an option? If your process is to keep busy, then this may be a better scenario for you but most of us would not want to. What if one spouse does and the other doesn't? What if neither can bear the thought of doing so right away? Does our situation allow that? What about the other siblings (if any)? Should they be back in school immediately? Would you want that? Would they want that? Is there specialized counselling you would like to access? Is there a special place the family may want to go or go back to together? Your options may be severely limited if no coverage is in place.
2. Insure them before health issues and habits become a factor. Could they develop health issues as they grow? There are exceptions where some children are born with or develop health issues earlier in life. These situations would be more challenging but the vast majority would have a relatively easier time getting coverage. As they become teenagers and into their early adult lives, could they pick up habits and try things that may make insurance more difficult and costly to get? Think of yourself and others you know for that age group. Have you gone to a gathering and tried something new? Did you or anyone you know do anything "crazy" as your younger selves? Some of these "fun" activities may make insurance more costly or impossible when desired later on in life.
3. You are giving them a gift for life. This may impact them, their future spouses, children and possibly grandchildren. We hope they live a good, long life and this may be the case. What if through health, habits or employment type they can't be covered when they have children? You could impact your next several generations in a positive way. How? Depending on the type of insurance and level; this could be a substantial investment for your children. Some Grandparents have funds for their grandkids and a permanent policy is sometimes a great place to build wealth and an awesome legacy gift. They don't always want to hand over cash but a policy not only protects them, it gives them a place to build their net worth while they're still children.
4. The cost for insurance for your children will never be more affordable. As we get older, insurance costs more. There are some plans that have an option to pay earlier. You could be done paying in 20 yrs for something that could continually grow and potentially be around for another 60 to 80 years accumulating.
5. Access to cash. Down the road, is it possible they may need some additional cash for education, a home purchase, starting a business? Depending on cash value and type of policy, they could have access to cash for a variety of needs. What if they have a business but access to credit is tight? They may be able to access some cash for additional business use with worrying about debt ratios and credit. There are a variety of possibilities.
These are a few of the reasons why I think insuring your child (if possible) is generally a good move if your situation allows. I hope you notice that only 1 of the 5 points involves a child dying early.
For further discussion, please contact us at [email protected] or 587-390-7359. We look forward to helping you protect your family and building a lasting legacy.