If you get upset about the idea of purchasing a life insurance policy for your child, we understand. There are many misconceptions and assumptions about what that really means. Do you expect to benefit from the loss of a child? No. That’s not the intention. In fact, a life insurance policy is purchased FOR the child and not for the surviving parent.
We know the conversation is an uncomfortable one (we’re parents too), so allow us to explain why a life insurance policy is one of the best gifts you can give your child.
There are many instances later in life, that can dramatically increase both the difficulty of getting life insurance coverage, and the monthly premium costs. These circumstances can include a chronic disease like cancer, diabetes and in some tragic cases, a terminal illness. By the time any individual is formally diagnosed with a chronic illness or life-threatening disease, the option of life insurance is often too expensive for most family budgets to navigate.
Universal Life policies are more expensive, but they are surprisingly affordable when the policy holder is young and in good health. Some plans provide extra coverage, or the ability to withdraw from the benefit, should the child experience a serious or life-threatening health condition.
Scenario One: A Terminal Health Condition
The most tragic of all circumstances for any parent, is the diagnosis of a terminal health crisis for their child. However, what is also tragic is being unprepared financially for the costs and needs associated with getting the best care for your child. Parents who have secured a quality Universal life insurance policy, can request (depending on the type of coverage) a withdrawal of the funds accumulated in the insurance benefit, to pay for in-home or hospital healthcare support.
Parents in these situations, have been able to leverage the funds in the child’s Universal life insurance plan to also supplement the household income, and take a leave of absence with the financial resources provided by the benefit. That means time at home or at the hospital, providing the best care a parent can provide, without being forced to choose between time with your child, and work. This is a gift to both the parents and the child, in this rare but real situation.
Scenario Two: Securing Universal or Term Life Insurance Until the Age of Adulthood
In the majority of cases, parents who provide a Universal or Term policy for their child, are successful at locking in superior life insurance coverage at an unbelievably low rate. When the child reaches the age of majority (18-21 years), the policy remains locked in at the affordable rate (regardless of any changes to the health condition of your child).
It becomes a valuable asset to adult children, who can then add their own spouses and beneficiaries to their plan when life circumstances change, and they become financially independent. And that is why many parents secure a Universal life insurance policy for their child in the first few years after birth, to give them the legacy gift of insurable benefits that they can tap into early (in the event of a health crisis) or enjoy low premiums into adulthood.
Now that you know the benefits of providing a life insurance policy on behalf of your child, consider the protections and advantages that it offers families. Talk to one of our licensed life insurance agents, or contact us for a referral to a local Bach Insurance Group agent, to discuss your life insurance needs.