This post is presented by Nicola Morgan – Financial Security Advisor

Insurance on your child – who does that? Me for one.  I used to be on the side of the fence where I just couldn’t understand why a parent would want to benefit from their child’s death. BUT that is not the reason at all as to why a parent might own a life insurance policy on their child. The real reasons are:

1. Protecting their child’s insurability
2. Setting their children up for success
3. Heaven forbid, funeral costs

And usually in that order.

Protecting their child’s insurability

• The saying “we are all insurable until we are not” speaks to this point. What happens if down the road, your child gets sick or has a condition that would exclude them from being able to purchase insurance? Or if they were insurable but at an extra cost? It doesn’t take much sometimes for insurance to come at an extra cost – smoking, physical or mental health, medication usage etc. By having a policy in place on your child now, you are protecting their insurability. Meaning that down the road when they might need to purchase additional insurance, to cover a mortgage or when they have children, they will be able to do so without any medical questions.

Setting their children up for success

• Permanent insurance not only provides insurance coverage but it also has a cash value component. This means that as your child ages, the cash value in the policy grows as does the insurance coverage amount. The cash value within the policy could be accessed to fund some of your child’s education or to help purchase a car when they go off to university or it can be left to continue to grow and be a legacy that they can leave to their children or grandchildren. The cash value in the policy can also be accessed without jeopardizing the insurance coverage – but that’s a conversation for another day.

Heaven forbid – funeral expenses

• I can’t even fathom what it could possibly be like to lose a child and my heart goes out to anyone that has gone through this. I know for myself that the last thing I would want to have to think about is how to cover the cost of the funeral. Most funeral homes will work directly with the insurance company to help alleviate some of the planning and stress to the grieving. Any money that might be left over, would be yours to use as you see fit. It could be used to cover bills while you take time to grieve or to set up a memorial in your child’s honour.

Additionally, the cost of insurance is based on age making insuring a child is as economical as it gets. We all know having children can be costly, so even a small portion of your monthly child tax benefit can go a long way to providing you with the best possible investment in your child’s future.

If you have any questions, please don’t hesitate to reach out to me.

Nicola

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Nicola Morgan is a Financial Security Advisor with Freedom 55 Financial, a division of London Life. Her passion lies in helping clients reach their financial freedom by creating a tailor-made plan based on personal goals and dreams. She is a proud member of Advocis®, The Financial Advisors Association of Canada and is currently working towards her Certified Financial Planner® designation.

When not focused on clients, Nicola is busy raising a spirited, independent 4-year-old and attempting to absorb every little bit of sunshine she can. Originally from Ontario, Nicola has called Fredericton home since 2008.

This is for information purposes only. Should you require financial advice, or have questions about your specific circumstances, please seek guidance from a financial advisor or accountant.