Life Insurance for Kids: Is It Worth It? | By Michelle Levesque

March 23, 2021

This post is presented by Financial Advisor, Michelle Levesque

I am asked on a daily basis “should I purchase life insurance for my child?”. When you have just brought a new bundle of joy into the world, this is the last thing you want to think of. It is never easy to discuss but necessary.

When you purchase life insurance on yourself as a parent, you are primarily concerned with not leaving anyone else a financial burden. You want to pay off your funeral expenses, debts, and leave money to replace your lost income for a surviving spouse or guardian to raise your children.

Because children do not contribute financially to the household, they do not need nearly as much life insurance as you. Over time the cost to clothe, feed, and educate a child really adds up. Financially speaking, if something were to happen to one of your children you would be paying out less over time. This is why I tell my clients normally a small amount of life insurance attached to your own life policy will suffice. When you attach it to your existing policy this is called a rider and it is the cheapest way of purchasing the coverage. I will often suggest about $20,000 -$30,000 payout because that will give you enough to pay a funeral and take some time off work.

One of the biggest benefits of purchasing life insurance on your child while they are very young and healthy is it ensures their future insurability. That’s reason enough to set this up. With most major life carriers when your child reaches 25 years of age they can purchase up to five times the coverage amount you purchased for them with no new health check. So if you purchased $20,000 for them, when they are adults they can purchase $100,000 even if they developed a health issue during childhood that may make them ineligible for life insurance if they had to get their health check and apply at age 25.

Another reason I suggest you keep the cost of life insurance for children minimal is there are other protections for your child that your money would be better off going toward. If you can only afford one protection I suggest critical illness on your child. If your child is diagnosed with a serious illness your costs can go through the roof. I have seen families have fundraisers, remortgage their homes, and deplete their investments all in an effort to make ends meet. The cost of expensive medications not covered, treatments, travel, hotels, time off work can be astronomical. Critical illness helps ease some of that financial burden.

If your child is diagnosed with any one of a very extensive list of illnesses a large lump sum will be paid out to you to use as you see fit. The great thing about critical illness is it’s also a “no regrets” purchase. There is no way you can lose your money. If your child is diagnosed with an illness you get a large return on your money which eases stress. If your child remains healthy you get 100% of the money you paid in each month when they reach adulthood. So it is like a forced savings and protection of your finances. Or if they pass away it pays out a quarter of the payout amount or 100% of your premiums paid in, whichever is higher, so essentially can cover funeral expenses replacing the need for life insurance. One of the three are going to happen: health, illness, or passing. Either way this type of policy will pay out.

Questions? Find me on Facebook

Until next time!

GET IN TOUCH!

FACEBOOK | PHONE: 506.261.2948 | EMAIL

Refer someone my way and get a $50 gift card of your choice when they become a client!

I have been guiding individuals and business owners financially since 2008. I chose to represent Front Gate Financial Group, a local brokerage, which offers every bank and insurance company. I do not believe in being biased or product pushing for one particular company since all companies can have competitive products at any given time. I review each individual’s entire financial circumstance, educate, then shop the market for the best in all areas. You deal with one person you trust and know you have the best in all areas.

My favourite part of being a Financial Advisor is educating and empowering people financially. There’s nothing better than having a new client tell me they are no longer overwhelmed and confused by their finances and are excited by the game plan we have put in place to budget, pay down debts, protect their family, and reach their goal of retiring comfortably.

Over the years I have been asked to give financial education presentations at numerous groups and events including: Fredericton Area Women’s Business Network, International Women’s Day, Mom Talk NB, the Oromocto Chamber of Commerce, Fredericton Regional Family Resource Centre, Military Family Resource Centre, Wedding Shows, Facebook groups. I am currently the Financial Pro for Mom Talk NB providing monthly articles and live discussions.

I am married, have a little fur baby and a beautiful daughter. I enjoy travelling with my husband, painting, scuba diving, snowboarding, yoga, and walking my pup. Quality time with family and friends is everything!

Find me on Facebook!