Choosing insurance for oneself is usually fairly straightforward. But what about children? Here is some food for thought.
While the death of a child will not affect the family income (since children have no income), it will certainly have an emotional impact for the whole family. Even if support from loved ones and psychological assistance are available, parents will need time to grieve the loss of their child. In addition to funeral expenses that the family has to absorb (up to about $10,000), there is also lost income when time is taken off work. That's why, in that respect, coverage for the death of a child can be a wise investment to ensure the family's financial security.
Tax-free benefit in the event of critical illness
The family of a child with a critical illness such as cancer or multiple sclerosis faces costs that can quickly add up. For example, one of the parents may have to miss work, or outside help may be required to stay in the home with a recovering child. Sometimes, there are additional expenses for things like transportation, accommodation, or special equipment.
With critical illness insurance, the insurer agrees to pay the insured a lump sum amount if the insured is diagnosed with one of the critical illnesses covered by the contract. This benefit can be used to cover the cost of home care and services, as well as travel and accommodation when treatment away from home is needed.
Protecting a child's insurability
A disability, critical illness or fragile state of health can have a significant impact on a child's financial future. A child who has been seriously ill may not be insurable as an adult. This situation can disqualify the child for a loan to buy a home, for example.
That being said, the best time to get insurance is when we're young and in good health. Since the cost of insurance increases with age, the longer we wait, the higher it will be.
By taking out life and health insurance for your children now, you are protecting their financial future (their "insurability"), and you'll be able to take advantage of very affordable rates. When they reach the age of majority, you can transfer the insurance contract to them so that they can maintain their coverage at still affordable rates.
Meet with a financial security advisor for advice on the best life and health insurance coverage for your situation.