Kids need life insurance, too

Losing a child is more common than you might think. A friend of my parents lost his seven-year-old daughter to a brain tumour, and one of my friends lost a sister at the age of 15.

But some advisors still won’t talk to clients about life insurance for children because they think it’s immoral or morbid.

Read: The value of insuring children

And one common objection clients have to buying life insurance for children or grandchildren is they don’t want to monetarily benefit from the child’s death. But if parents, or grandparents don’t need the policy proceeds they can use it to benefit others. For instance, they can set up a bursary or scholarship in their child’s or grandchild’s name, or make a charitable donation.

Read: Insurance and children

Remember, a child’s death is the worst case scenario and having life insurance can be a financial safety net for when the worst happens.

One advisor told me his friend’s teenage son committed suicide. The emotional duress made it hard for the husband to go into work, and it was the life insurance the family had on the son that kept the family afloat.

Read: Are your clients’ kids protected?

Another advisor heard of a situation where a family had to pay $180 per month to a funeral home until their child’s funeral costs were paid off.

So isn’t it best to prepare clients for these worst case scenarios?

Read: Insurance for young people

And when the kids turn into adults, those life insurance plans will allow them to:

• buy more in the future at standard rates;
• grow money in a tax-sheltered environment;
• have a free transfer of ownership when mom and dad (or grandma and grandpa) think the time is right; and
• in the event the policy is triggered, they’ll have a payment level decided upon by their families, not a funeral home.

So gently ask clients what plans they’ve made for the worst so they can live stress-free.

Helena Smeenk Pritchard has over 36 years of experience in the insurance industry and is the Principal of Helena Smeenk Pritchard & Associates, a leader in “Insurance Know-How” training. Helena publishes a weekly free ‘Did You Know’ newsletter on her site.