When it comes to selling critical illness insurance for children many advisors tend to go for the 1%, but some industry veterans suggest forgetting the high-net-worth client and instead focusing on the middle class where a child’s serious illness represents a significant strain on the family finances.
“When a kid gets sick you’re forgetting one thing. Both parents are working full time. Who is going to look after this kid? Now one of you is going to have to stop working. That could cost you somewhere between 50 and 100,000 per year. Now you lose one of those salaries and you’ve got a sick kid to boot,” independent insurance broker Jerry Wiseblott told LHP recently. “If your kid is at Sick Kids you’re not working, you’re there all day. One of you is quitting and the other one is thinking about it all day and at 4 o’clock you leave. It’s very difficult so from a financial standpoint it’s not the craziest idea.”
Many advisors assume that after all the other household expenses such as the mortgage, car and house insurance, groceries, and everything else that goes into raising a family, there’s nothing left for extravagant purchases such as critical illness on a child.
Furthermore, there’s an argument to be made that it’s more important to ensure the parents are adequately protected before looking at their children then the other way around. Niagara Falls advisor John Wilson suggests it’s likely a better use of funds to put the premiums for a child’s policy towards increasing the parent’s coverage ensuring that should a major breadwinner die the children and the remaining spouse are financially taken care of. Wilson is referring to life insurance but the argument can also be made for critical illness.
“I sell it to parents as well but it’s been a good policy for me to sell to grandparents. The parents have a lot of expenses,” said Wiseblott. “To be honest sometimes I’d rather the parents spend more money on protecting themselves than their children. It’s more pertinent that parents have life insurance on themselves.”
In the end the wealthiest in society have the least to lose by an unexpected critical illness. Meanwhile, the middle class have the most to lose. If anyone should be buying critical illness, whether for themselves, or their kids, it would be them.
“To talk about critical illness and get them to buy it, especially when we tell them it’s mostly for them more than for the children because they might have to not go to work for months if their children have a critical illness,” Montreal advisor Andre Loisel told LHP. “For the difference in premium, CI is not more expensive than life insurance as it is with adults. Usually, the price is not the problem, but maybe to talk about it is.”
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