Advisor provides an intimate perspective on life coverage for children

by 22 Jul 2015
My Own Advisor is a website chronicling one man’s journey to become his own financial advisor. A recent post discussed the pros and cons of parents buying life insurance policies for their children. The advisor himself being one of those recipients.

“I suspect life insurance coverage for children is not a high priority for many parents today and it probably shouldn’t be – I believe term insurance and disability insurance are more important,” wrote My Own Advisor. “However, as you get older, if you have a childhood life insurance policy, you might want to think twice about letting go of your insured past since it can help you and your loved ones in the future.”

For many the thought of one’s parents buying a policy for a child in the event that child should die is a morbid thought. However, some will argue that this kind of policy can be useful to pay for final expenses such as the funeral, etc., not to mention covering the expense of taking time off from work to grieve for your child.

However, when speaking with Niagara Falls insurance agent John Wilson, the advisor made it perfectly clear this isn’t something that happens very often today given most parents have bigger expenses to worry about such as their children’s university tuition.

More importantly 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.

“For now I’ve decided to keep my childhood policy and let the non-guaranteed dividends from the investment portion of the policy provide paid-up additions for the policy value,” wrote My Own Advisor. “Although the dividends paid will fluctuate the amount of coverage will keep creeping up over time and that’s nice if I ever become uninsurable or I wish to reduce my life insurance (term) coverage in the years ahead.”

It’s a personal choice for sure.


  • by Ray 2015-07-22 1:17:31 PM

    It is my belief that the last line should be if I ever become uninsurable! I agree that the bread winner needs first priority. Having said that, I also believe that with the onslaught of many situations, health and lifestyle, that can contribute to young people being unsinsurable, it is wise to get some insurance inforce, even the least expensive, as long and insurability is protected. Term rates have come down so much that it becomes a very inexpensive investment that can deplete the risk of not qualifying in the future. I say investment, even when I refer to Term Insurance, because it is protecting against a risk of not being able to receive funds when needed.

  • by Catherine 2015-07-22 1:29:54 PM

    I wish my parents had bought a policy on me when I was younger (if there was a guaranteed insurability option rider that would have been good too), because now I am uninsurable.

  • by Peter 2015-07-22 1:53:01 PM

    Most of my clients are middle class. In addition to expenses for the kids, mortgage, cars, clothing, groceries and other basic living expenses there is not much (if anything) left over at the end of every month.
    While I do not minimize the importance of buying a life insurance policy (with gteed insurability), is it not much more important and prudent to buy adequate life insurance for both spouses, followed by disability insurance and critical insurance for both spouses?
    Add a child rider instead onto one of the parent's policy. Most are convertible to age 20 or so.