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.”

Term or Permanent Insurance….What’s the difference?

When sitting across the table from my clients I often ask, “Do you know the difference between term or permanent insurance.” Most of time the answer is no. At this point, I highlight some of the key points…

The need for insurance has to be established…

Term-Insurance for a specific period of time. Mortgages, loans, young families with high debt ratio.

Permanent-Special needs child, Income tax liabilities, any debts to be paid at death and business partnerships.

Do premiums increase with age?

Term-When you purchase a term policy your premiums are locked in for that term and increase at renewal time. You have the option to renew it but at a higher premium.

Permanent-No, the premiums are guaranteed not to increase.

How long does someone pay the premiums?

Term-The duration of the term.

Permanent-There are a number of ways…a quick 20 year pay, till death or if you cancel the policy.

Can the policy be renewed before it expires?

Term-Yes…your policy is non cancellable and guaranteed renewable. In order to receive the best rates possible, your broker should be contacting you to establish if your financial situation has changed before the policy expires.

Permanent-Permanent insurance covers you for the duration of your life. It can pay death benefits at any time, and there is no expiration date, as long as the policy is active.

Is there a penalty for cancelling the policy?

Term-No

Permanent-Perhaps, you can cancel or surrender your policy but you may have to pay surrender charges which is like paying a back end load when you sell shares of a mutual fund.

How much does it cost?

Term-Very affordable at a younger age with premiums increasing over time.

Permanent-More expensive than term insurance but if the need is to have insurance for an extended period of time than it can be more economical.

Does any of the premium act as a savings component?

Term-No

Permanent-Builds up a cash value. A portion of the premiums are invested and offers additional benefits.

How To Protect One of Your Most Valuable Assets.

In this article I explain the real facts that can save you money and protect one of your most valuable assets…your HOME.

When asked at the bank to purchase mortgage insurance do you really know what you are signing up for.  I’ll explain the differences between purchasing mortgage insurance through your bank/financial institution or through an Insurance Advisor like myself

Here are the facts.

1. Does your death benefit remain level?

  • BANK–         NO Your bank mortgage insurance decreases, so does your coverage but your premiums stay the same
  • ADVISOR – YES

2.  Do you own the policy?

  • BANK –             NO the bank does
  • ADVISOR –    YES

3.  Is the mortgage insurance portable?

  • BANK – NO- if you change lenders you have to reapply, if your health has changed you run the risk of NO coverage.
  • ADVISOR–       YES

4.  Do I choose the beneficiary?

  • BANK–             NO-the bank is the beneficiary and pays off your mortgage.
  • ADVISOR–      YES- you name the beneficiary, they receive the full benefit amount and they decide what to do with the proceeds.

5.  Is the underwriting done at the time of the application?

  • BANK–             NO- The bank mortgage does it at the time of death.
  • ADVISOR-     YES- All medical history and testing is done prior to issue of the policy.

5.  Do non-smokers and females pay less?

  • BANK–           NO– The bank mortgage insurance is a one size fits all concept.
  • ADVISOR YES– Rates are based on individuals medical condition and sex, females and non smokers receive lower rates.

6.  Can I continue the coverage if my mortgage is paid off?

  • BANK – NO– Once your mortgage is paid off at the bank, no coverage.
  • ADVISOR YES– You can keep it, convert it or cancel it…you have the choice.

If you have additional questions or would like to speak to me in more detail regarding your situation email me at [email protected]

Check this out…a must see!

CBC Marketplace does an investigation on two families who bought the coverage and thought they were protected, only to have their claims denied.

http:www.cbc.ca/marketplace/in_denial/

WHICH PROTECTION WOULD YOU RATHER HAVE?