Is It Worth Getting Life Insurance for Kids?
No doubt, the most complicated and emotional subject that most parents and other guardians alike will deal with is whether or not to buy Life Insurance for their kids. It is the balance of financial issues and the devastating prospect of the early death of a child, which is quite improbable. In fact, it is even more precise in the case of countries like Canada, where health and money systems greatly differ from others. In this blog, we approach the different aspects of getting Life Insurance for the little ones: practicality, emotional peace of mind, and implications on the cost of Life Insurance.
Understanding the Basics
Life Insurance for children is never really marketed by the needs of the world but is there as a warm and fuzzy sales product for financial planning. It's a real hot-button issue, as no parent wants to think about losing a child. Approach the subject with practical, not emotional, thoughts, and maybe it will help you make an appropriate decision.
Find Out: 10 Best Life Insurance Plans For 2024
The Case for Life Insurance for Kids
Financial Protection Against the Unthinkable: Really, the only reason one should consider Life Insurance for Kids is to ensure that if the unimaginable loss of a child occurs, then you have the money to bury them and take care of other costs related to their death. Although the emotional loss cannot be compensated for, one would not be upset over a financial strain on top of a severely traumatic event.
Guarantee of Future Insurability: The purchase of a Life Insurance policy for a child guarantees that the child will have Life Insurance coverage when he or she is older, despite any health changes that may occur during life. This can particularly be important if a child later develops some sort of medical condition that would, under normal circumstances, make it impossible for him or her to be insured.
Building Financial Savvy: Some children's policies have an investment element that grows over time and eventually provides the holder with some funds that can be used later in life for expenses like education and buying a home. This introduces the children to the need for proper planning and saving.
Low Cost of Life Insurance: Typically, the premiums for this kind of policy are very low considering the low risk involved in insuring the lives of children. This makes it relatively cheap and prudent in better ensuring financial protection and peace of mind.
Considerations Against Life Insurance for Kids
Financial Necessity: Unlike adult Life Insurance, which serves as a way to replace lost income or to pay off debts, Life Insurance for Kids does not look to meet such direct financial needs. Parents must think about it: even though the premiums are low, could the money be better placed in an education savings plan?
Emotional Considerations: The idea of buying Life Insurance for a child can be a touch uncomfortable, and parents should balance their emotional response to the decision with the practical reasons to buy Life Insurance. Make sure that it fits in with the values and goals of your family.
Opportunity Cost: The money paid in premiums could have an opportunity for other investments that may give higher returns if put into high-growth vehicles like stocks or education funds, considering that you have a long time horizon before the funds will likely be needed.
What Experts Say
Financial planners often advise that while Life Insurance on children is not necessary, it can often be a strategic part of a bigger financial plan. Get a full overview of your family's financial situation with a qualified advisor and see if this fits in the bigger picture.
Stories from Real Life
The Thompsons are a family living in Toronto who took out a policy on their daughter at birth. When she got sick with a chronic illness at the age of ten, the family was informed that, even though it was no small thing to deal with, this "pre-existing" condition meant that their daughter was locked into guaranteed insurance as an adult. This policy not only provided them with financial security but also peace of mind, knowing that their daughter was covered no matter what the future holds.
On the other hand, the Martins from Vancouver chose not to purchase any Life Insurance for the children since they chose to put every dollar they had into the RESP account. For them, it was a more real and actual benefit to be investing in the future education of their children.
Comments
Post a Comment