Should you take out insurance on your child?

Coverage for death or accident

The death of a child, while of course very tragic, will not affect the family income since children have no income. However, the family will have to assume the costs of funeral expenses, which usually vary between $5,000 and $10,000. So you may want to be prepared for this. For a child, coverage of $10,000 in case of death costs $1 or less per month.

Lump sum payment for serious illness

The family of a sick child faces costs that can quickly add up. For example, one of the parents may have to miss work, or outside help may be required to stay in the home with a recovering child. Sometimes, there are additional expenses, such as transportation and accommodation costs, or equipment purchases.

Insurance for serious illness has become increasingly popular in the past three or four years. The insurer agrees to pay the insured a single lump sum if the latter is diagnosed with one of the serious illnesses covered by the contract. For a child, coverage of $10,000 in case of serious illness costs less than $2 per month.

Protecting a child's insurability

A child who has been seriously ill or who has been diagnosed with a serious illness may not be insurable as an adult. This situation may prevent him/her from being eligible for a loan, for example, to buy a home. For this reason, it is suggested that parents take out a life insurance policy in their child's name in order to protect his/her "insurability". In this way, the coverage the parents took out on him/her when he/she was young will be acquired, thereby protecting his/her "insurability".

To obtain the same result in a more economical way, you can take out insurability protection for extended coverage. This means that the insurer agrees, so to speak, to let the insured take out extended coverage at a later date, in an amount and at the time established in advance, regardless of his/her insurability.

For a child, insurability protection for extended coverage, for example in the amount of $25,000, costs about 50¢ per month.