Is Life Insurance for a Child Really Necessary?

As an advisor, speaking to parents about purchasing life insurance for their child can be a very delicate subject.

Traditionally, you purchased life insurance to protect your family from an unexpected death, which could potentially create financial hardships. For example, for a family with small children, if the primary income earner dies money is still required to maintain the household.

Where is the money going to come from and how long will the savings last? How does one replace that lost income? Most families will not have accumulated enough savings to sustain the same standard of living for longer than 3 months. Without life insurance to protect your income, the consequences can be drastic — the home in which the family has worked so hard to create warm comfortable security for the children, may even be at risk and a drastic reduction in lifestyle may be your only choice.

When meeting with my clients, analyzing the family’s life insurance needs, which includes insuring the primary income earners, is of course my first priority, but there is another side to this. What about protection for your child? Although children are not the income earners and usually do not have a financial impact on the family’s way of life, insuring your child can create future financial opportunities for that child.

Life insurance is primarily based on the health of the individual and the family history of illness or disease. As you grow older, health concerns increase. Insuring a child at a young age creates a safety net protecting the child against future health issues that may determine if they are eligible for insurance, i.e., cancer, diabetes, MS, etc. It also protects the child against the risk factors in dangerous occupations such as the risk for pilots or firefighters. In addition, it can protect your active children for the risk associated with sporting activities such as back country skiing, parachuting, football etc., which normally might incur a decline in coverage or an increase in premiums anywhere from two to three times resulting in high monthly premiums. Purchasing life insurance for your child now, can also guarantee that he or she has the ability to increase the amount of insurance in the future by simply adding a guaranteed insurability rider which allows the child to upgrade his/her insurance in the future… without a medical.

Permanent policies also have the option to lock in rates at a low premium that can be paid up for a limited number of years. The policy can generate a cash value, which has the ability to outperform traditional investments in terms of rate of return. This cash value can then be made available for college funds, emergencies, loans, new business ventures, or to help supplement the child’s future retirement income.

Throughout my practice, I repeatedly hear comments similar to, “I wish my parents would have bought this for me when I was young,” For those parents that have planned ahead, their adult children are thanking them.

In Summary, insuring your child provides them an opportunity to obtain the insurance at a fixed rate. Having the policy paid off in a short period of time creates a cash value that can be used at a later date for his or her retirement, loans or home purchases and avoids a potential refusal from the insurance company in the event they develop an illness and, as a result, cannot obtain new insurance, or even if it possible to obtain the insurance, be rated at a higher premium due to health or age issues.

How do you choose?

When deciding to choose a professional to take care of your personal interests, ie: buying/selling a home, investments, insurance, renovating your house, etc. how do you decide?

Well here are a few tips to consider:

1.  If they have a website, make sure you read it.

2.  Ask them for names and contact numbers of previous clients for references on their work.

3. Contact associations they belong to for any complaints that have been made against them, are they in good standings?

4.  Are they a member of the Better Business Bureau?

5.  Talk to them on the phone before inviting them to your home.

6.  Check in with friends and/or family to see who they use.

7.  Ask them how they get paid, any professional should be able to disclose this information.

8.  Don’t make rash decisions, get quotes, think it over, schedule another meet to answer any  questions that may need clarification.

9.  Ask about their credentials, how do they keep up with information in their industry, do they work with anyone else?

10. Lastly, we all have it and sometimes ignore it,  listen to your intuition.

Remember the only agenda a professional should have is meeting YOUR NEEDS…They are there to share their knowledge, experience and expertise, but the ultimate decision is YOURS.

Is it Possible to buy time?

As an insurance advisor and former well-being expert, I will show you just one practical way to buy time, a simple and proven strategy you will NEED.

You may ask yourself how is it possible to buy time?

For myself, it’s a strategy I could not have lived without.  It’s the “time solution” everyone can benefit from.  But first, let’s understand the concept of “time” as we know it in today’s busy world.

Time cannot be seen or taken for granted.  It just happens…second by second, minute by minute, hour by hour.  The clock continues to tick and gives no care to our agenda!  It operates on it’s own agenda.  How many of us have said, “I wish I had more time“, or “I wish there was more time in the day?

The world revolves around keeping us on schedule.   Getting to work, business meetings, catching the bus, going to the movies, soccer practices, medical appointments are only a few events that are scheduled according to time.

We all make choices on how we want to use our time. However, what happens when time makes the choice for us?   The phrase, “It just wasn’t the right time“, often refers to a death, illness, or an unexpected medical event which in many cases we had little control over.

The financial consequences of losing someone or suffering a critical illness or having a medical emergency can be a devastating time for anyone.  The possible loss of future income as well as sudden expenses that occur can have an extreme financial hardship on an individual or family.  Time is not on your side when the bills continue to roll in and there is no money to pay them.  Your family’s standard of living is affected, not to mention the impact on future education for your children or retirement dreams.  There has to be a “time solution” in place.

Having life insurance and other types of insurance such as critical illness or disability insurance is a “time solution” that we need to consider for our families and ourselves.  It is these “time solutions” that can simply buy you more time when you need it the most.

Grief has no scheduled time when it strikes.  In the event of your death you can give your loved ones the necessary time to make important decisions.

Perhaps, buying more time could give you the financial stability to recover from a serious illness without having the pressures of going back to work.

I know the pain and grief that takes hold of you after a death.  When my husband passed away, I was afforded the time that I needed to grieve and make those important decisions regarding my future because of the right “time solution” he had in place for me.

In my practice as an insurance advisor, I am dedicated to offering you the gift of more time. It’s a time strategy that worked for me and will work for you.

  • Statistics show it takes a minimum of 2 years to get back on track after the death of a loved one or to recover from a serious illness
  • Time has no agenda…it just happens.
  • What insurance strategies do you need to put in place to create a time solution for you and your family? What happens if your income stops or is interrupted with an unexpected death or illness

did you buy enough TIME?

“It will never happen to me…”

It was spring 2003, when my insurance advisor called me to set up an appointment to meet me at my office.  I had thought to myself, I have life and disability insurance what more do I need.  Being self employed and raised in a family where insurance was a priority, had me agreeing to meet to see what I was missing.

My advisor of 10 years whom I had trusted, suggested I buy critical illness insurance.  After explaining the benefits to me and the realization that I was self employed without the opportunity of sick pay,  made me agreeing to his recommendations to purchase the policy,

Years had gone by and premiums were paid, when in March  2010, the disbelief had become reality.  After 2 years of symptoms and having an MRI, the diagnosis came in across the fax…”demyelination related to MS”, my heart sank and I found myself reading the results  over and over.  “Multiple Sclerosis, this can’t be, not me”.

I immediately called my advisor for guidance and he proceeded to tell me that , “yes you will receive the benefit”. I put the wheels in motion and contacted my doctor and specialist to complete the necessary forms to receive my benefit.

After mailing in the paperwork, the insurance company send me a cheque within 10 days for the full  benefit amount.  “Wow”, I thought to myself, “this really does work.”  The thought of having some financial assistance to travel outside the country to receive alternative treatment, pay bills and put money on my mortgage was a relief

At times, I feel blessed with being part of this industry with a diagnosis of MS.  It becomes real to my clients, they have the opportunity to learn firsthand how my experience of having critical illness insurance as part of my financial plan has paid off.  Pointing out that, “yes, it can happen to anyone”…but the message I can bring to my clients is, “we don’t know what tomorrow will bring, but we do know that if it comes with surprises, we can be better prepared.”

Are you financially prepared to get older?

As an Insurance Advisor, I will explain the real facts on the future health care of our elderly.  I counsel my clients on the importance of including long term care insurance as part of their retirement plan.

You’re probably thinking, Why would I need long term care insurance? “My children will take care of me.” Yes, that may be the case, but have you thought to ask them? What happens if your children are in the “sandwich generation”, meaning they are raising their own children and working long hours? Should they be expected to take care of their aging parents? You may want to move in with one of your children, but how does your daughter/son in-law feel about this? And what happens if you need 24- hour care? Does one quit their job to take care of you?

Long-term care is not necessarily for one year or two towards the end of one’s life. Someone diagnosed with Alzheimer’s disease, for example, may require care for 10 years or more. A person diagnosed with a non- life- threatening condition like multiple sclerosis in their 50s could live for decades in a good long-term care facility and withstand a better chance of staying independent and enjoying those years.

  • By 2011 our population of elderly will be almost 25% of the population.
  • Currently, 17% are over 65 years of age.
  • In 2010 we have as many seniors as children.

According to an article in the Vancouver Sun, *”Before Jan 31, 2010 the amount a senior had to pay in long term care was based on an 11-step grid ranging from $940 to $2,260 a month, depending on their income.

As of Jan.31,2010everyone in residential care will instead pay 80 percent of their annual income to a maximum of $2,932 a month. Most will also be allowed to keep $275 a month.”

*Times Colonist columnist Jody Paterson.

What can we expect from the government when it comes to long term care?:

  • Extended wait times of 2-3 years
  • Over crowded and the need for upgraded facilities
  • No or limited choice of location
  • Continued reduction of services

Do you have medically trained family members who are willing and able to quit their jobs and provide you with constant care? If not and you decide to pay for private home care or facility care you will deplete your retirement savings in a few short years. Here are some facts:

  • Home care costs range from $30-$50/hour depending on services and government funding is based on your annual income.
  • Government facilities are also based on your annual income to maximum of $2932/month.
  • Private facilities range from $2500 to $7000+ per month, per person, not per couple.

If you are between the ages of 30 and 80, you can apply for long term care insurance. Depending on the level of benefit you select, you can receive up to $300 per day – tax free!

It’s better to choose where you want to go…rather than be taken where you have to go!