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Should you insure your child?

Should you insure your child?

Do kids need Child insurance plan? This has been a much-debated subject.

Unlike kids, adults buy insurance to protect loss of income due to the untimely death. In the absence of revenue generating ability, insuring a child seems to have the ethical issue if not defying the fundamental of insurance. The Child insurance plan is very vital in a family.

Let’s us explore some reason why people buy insurance for their kids. Some ideas may be controversial in nature.

Investment

Some parents buy child insurance plan with investment as a primary reason. There are two camps with opposing views; one is in support, and another one goes against the idea. The former find it is a good idea. The latter finds it is a waste of money, they are of the opinion that money should be invested elsewhere. In their view, insurance charges and expenses have eroded the investment return.

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Education

In the past, insurance used to be a consideration when parents plan to set up education fund. Nowadays, as compared with many other tax-advantaged children education schemes such as Pre-Paid Tuition Plans, 529 plans, and many others, insurance has become less attractive as an instrument for parents to accumulate child education fund for their kids.

Burial

Getting kids insurance policies for funeral expenses is an unspeakable reason. It is always the last thing a parent would like to have in mind. Many parents are not comfortable with the idea of taking up life policies on their children for such purpose. Even if they do, they normally get small systems that are just adequate to cover last expenses. For parents, it is unthinkable for them to profit by the death of anyone of their kids.

Convenience

Many parents buy life insurance policies for their children probably due to convenience. When parents have decided to get insurance for themselves, they always find it is not a bad idea to include their children in the “family package.” Even though these policies are usually for very small amounts of coverage, the parents may believe that they have been fair to everyone in the family since everyone is covered. Another push factor is the fact that there is no medical requirement for the children in most situations.

Future insurability

A more acceptable reason to get kids life insurance is guaranteed insurability, no matter what are the children’s health status in future. The kids will always have insurance coverage even if they later develop diseases so severe that they will not be to get any coverage if they apply for a new life insurance policy.

Future insurability is especially important if the family background exhibits less favourable health history. The parents may like to get their children life insurance to protect their children’s future well-being and also their children’s dependents. The parents alone may not be able to take over the financial responsibility for the children’s family.

Creation of property

Many people don’t look at insurance policy as a feature like what they look at land, house or car. A person can own $100,000 life coverage by making a premium payment which is only a fraction of the value of the policy. Unlike other forms of properties, life insurance is a very secure asset without much personal consideration from you like how you manage other types of properties.

By getting the child life insurance policies, the parents help them create assets that may increase in value. Life insurance on the children can also be regarded as gift of love from the parents to the children.

Charity

Life insurance is always meant for those who survive. That’s why it is called life insurance. It is regularly the saddest moment in life for parents to know their child is no longer around. There is nothing we can do to bring the child back. But the life insurance policy issued on the child life can help many people. The proceeds from the life policy can be donated to charitable organizations in the name of the child to help others in need. The child may die at the tender age, yet he or she can help many people to have a better life.

Essentially life insurance on children is not a need but a want.

The parents, being the family breadwinners, should place priority on their protection needs and make sure they are adequately covered. After all, they are the economic pillars of the family. Once the heads of the household have sufficient protection, there is no harm to consider life insurance for the children. Future guaranteed insurability is one good reason for children to have life insurance.

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