Last updated on June 1st, 2016
A question that many parents ask is, “should I buy a child life insurance policy?” Many people think that it’s not necessary because of two things. One, there is a misconception that a funeral for a child is not very expensive. However, that is not true. Final expenses can add up, even for children. Two, life insurance policies for children seem to contradict the reason for buying life insurance in the first place: income replacement. Adults purchase life insurance to replace the income that will be lost if a breadwinner in the household dies. Children don’t bring in any income, so why purchase life insurance? Here are some things to consider when wondering if you should buy a child life insurance policy.
As mentioned above, final expenses for even a child can add up. Caskets, flowers, funeral homes, grave plots, and more aren’t cheap. Even something relatively small, such as a $5,000 or $10,000 term life policy on your child can go a long way toward paying for the necessary elements of a burial. Losing a child is the most traumatic experience someone can go through, and not having to worry about how to pay for a funeral is a good thing.
Time Off Of Work
In the event of losing a child, I cannot imagine going back to work after a couple of days. People typically take several weeks off of work to cope with the loss, seek counseling, etc., and in a lot of cases, this time off of work is uncompensated. Having a life insurance policy for your child can help cover the income that will be lost from not going to work.
As mentioned above, counseling is a cost that must be considered when a child dies. But counseling isn’t cheap. Having a life insurance policy on your children can provide money that can help pay for therapy sessions. You may have a good health insurance policy that pays for mental health benefits, but how far will those extend, and what is your copay or deductible? Is it affordable? Life insurance will help cover those costs.
A difficulty with obtaining life insurance is health status. If you have health problems you could be either limited on the amount of life insurance you can buy, or you might be denied insurance and have no coverage. However, many times if you purchase insurance while you are healthy you can keep the insurance when you get sick. For children, this is especially important, because most kids are healthy. So if you purchase a policy now in their younger years, they can renew as they get older not matter their health status.
What is life insurance conversion? Life insurance conversion is the ability to change a policy if circumstances change. If someone has a term life insurance policy that is about to expire and it has a conversion provision, that person can convert that term life policy to a policy type that is more permanent. A policy can also be converted if term insurance through an employer ends through employment termination. For kids, conversion is an important thing to consider because the policy can stay in place even as circumstances change when they get older.
Where to Purchase Child Life Insurance
Perhaps the easiest place to purchase life insurance for children is through work. If your employer offers a child life policy that you can buy, the price will be affordable, and the policy will typically offer at least enough insurance for final expenses.
You can also buy child life insurance through private insurers, either in person or online. You can easily get quotes and sign up for policies that will keep your child covered with life insurance.
When you find yourself asking, “should I buy a child life insurance policy,” keep in mind that the cost is usually small, and you will be able to be financially stable while you are going through a difficult time.