Parents and Grandparents! Life insurance for children and grandchildren is a gift, not a jinx!

My experience is that there is actually a mindset, especially with parents, that if they carry life insurance on their child they could somehow increase that child’s chance of an early death. Let me assure you that there is no statistical link between a child’s mortality and whether or not they had a reasonable amount of life insurance.

 Why carry juvenile life insurance? The first reason, the one most parents don’t want to think about, is that even though the chances are very small, occasionally a child will die prematurely. While we all say that we can probably scrape together the money it takes to pay final and burial expenses, the truth is that is the purpose of life insurance.  There is a very good chance that a child’s untimely death will be far more expensive than you would have ever imagined, and a small insurance policy is only going to help defray those expenses, not pay them in full.

Now back to the greater value of life insurance for children. Now that we have gotten over the bump of dealing with the thought that a child might die prematurely, here’s the reality. They probably won’t!

The greater value, the gift in a children’s insurance policy, is the fact that it generally is guaranteed issue life insurance so getting it is not a traumatic event and the policy will generally guarantee the child’s insurability as an adult. I worked with a 22 year old client the other day who had battled leukemia through his teenage years. It appears he has won that battle, but $100,000 of term life insurance is going to cost $1200 a year. If his parents had bought the right policy when he was young, his insurability would have been guaranteed at a rate that would have allowed him to have a universal life policy for about $200 a year. He is an adult paying for his own insurance, and the gift of juvenile life insurance, whether purchased by his parents or grandparents, could be saving him $1000 per year now. It would save money and give him permanent instead of term insurance. That is huge!!!!!

 Parents and grandparents. Give the gift of life insurance!

Who is your life insurance advocate?

Advocate is defined in the dictionary as “one that supports or promotes the interests of another”. There are several “advocacy” groups that promote life insurance to their members or to the group of people that they would suggest they are advocates on behalf of.

 Let me suggest three advocacy groups that you would suspect would offer the best possible life insurance products to their members or audience, when in fact they offer downright bad deals and try to gloss it over by appearing to be your “friend”.

Let’s start with Gerber. I’m not sure if their baby food is any good, but I can tell you that the juvenile life insurance, or children’s life insurance they offer, is far from a good deal. They offer a guaranteed issue product, but from a price and benefit standpoint it pales in comparison to what can be found through an independent life insurance agent. Pretty baby on the jar. Lousy life insurance!

Next let’s talk about the AOPA. For those that don’t fly airplanes, that is the Aircraft Owners and Pilots Association. Go to their website and you will see how they purport to be advocates for private pilots in just about every area, including life insurance. Their company of choice is Minnesota Life. There are so many companies out there that can beat Minnesota Life for aviation covered life insurance, that if you weren’t depending on them to be your advocate, it would be laughable. If you dig into the life insurance end of their website you will actually find where they admit that they get a kick back from Minnesota Life which they use to further their advocacy. Maybe Minnesota Life’s rates are high because they have to pay the AOPA to steer business their way.

And last but not least, being old enough to be a member, our beloved AARP. Now claiming to be an advocate for us old folks and really not doing it is, well, WRONG!!!!!!!!!! AARP pushes a New York Life term product that is overpriced to start with, the price goes up every 5 years, and after age 80 it goes away. “One that supports or promotes the interests of another.” Now I don’t know if AARP gets a kickback from New York Life, but I do know that they don’t allow any other life insurance advertising in their periodicals or on their website.

You want an advocate? Someone who really does what the definition suggests? Get your insurance quotes for your term insurance, universal life insurance or whole life insurance from an independent life insurance agent. Get unbiased advice from an agent that isn’t being an advocate to a specific insurance company or an organization, but to you.

Why carry life insurance on your children?

Again, not a subject that most parents these days want to talk about, but it used to be very common. The truth is that the chance of a healthy child dying before adulthood is very small. So, in the minds of most loving parents is the thought, “why even think about it, let alone insure my child to help pay final expenses?”

Why did it used to be common? Back when I was a child my parents carried a small whole life policy, not because they were overly concerned with my premature death, but because they wanted to pass it on to me when I reached adulthood. The problem with the whole idea was that they carried a $1000 policy and when I grew up they passed on a $1000 policy. Inflation alone had rendered the size of the policy fairly useless.

 One of the best examples of a newer, better way to have children’s life insurance is structured something like this. You pay a very modest one tme payment. Your child is insured initially for say $5,000. At certain ages the amount increases to say $10,000 and the $15,000. It kind of keeps up with inflation in that sense. At your child’s age 23, they can convert the policy to a $100,000 universal life policy WITHOUT EVIDENCE OF INSURABILITY.

All in all a juvenile life insurance policy with much more meaningful benefits if there was an untimely death, and the real jewel is locking in a child’s insurability for adulthood with a meaningful amount of insurance. This policy is priced so well that, even if it didn’t offer any death benefit at all during childhood, the premium would be worth guaranteeing your child’s adult insurability.

Why carry life insurance on your children? Because it can be a significant gift when they reach adulthood!!!

Life insurance for children!

Now here’s a subject that 95% of parents don’t want to talk about. No parent wants to think that a child might die and therefore we don’t want to plan for that occurrence. I understand the emotional issue behind it, being a parent myself.

Children’s life insurance, sometimes called juvenile life insurance, can actually be a prudent way to give a child an inexpensive jump start on their own insurance portfolio when they become an adult.

There are policies out there that can provide small amounts of coverage, truly no more than burial policies, during a child’s growing years. Some increase incrementally as a child gets older. Usually at age 23 the child has the opportunity to convert their juvenile policy into a larger personal policy. The next thing I want to say is so important and is the key to the importance of a juvenile life insurance policy. That conversion DOES NOT REQUIRE EVIDENCE OF INSURABILITY!!! No matter what your child’s health is at the time, the company is bound to offer them the adult policy without any rating due to health problems.

 These policies are very inexpensive if you buy them as stand alone policies. Do not add a child rider to your policy or buy a Gerber or Globe Life policy unless you just feel like paying more money than you need to for your children’s life insurance. If you have a child rider or a Gerber or Globe policy, seek out a more affordable alternative and cancel it once the new policy is in force.