One of the most debated topics in the life insurance industry is life insurance for babies. Most people are polarized on this subject, with some people thinking life insurance for babies is ridiculous, while others have seen it as a necessity. The purpose of the post is to express the views of both sides of the argument, and suggest maybe their is no right or wrong answer to whether babies need life insurance coverage or not.
No matter which side of the equation you are on, we can all agree the birth of a child is one of the most amazing moments in one’s life. With this added financial responsibility for the family, life insurance certainly should be part of the picture. The birth of a child is one of the main “life events” which trigger someone to purchase life insurance. This is the critical base of a well rounded financial plan. I am a firm believer every parent who can qualify for life insurance needs to have it. Hopefully, everyone else feels the same on this topic, but what about life insurance for babies?
When it comes to purchasing life insurance policies for babies, and children in general, some people think it is a waste of money and other people feel it is an important gesture. To make the right decision for your family, it is important to understand both sides of the coin to make an informed financial purchase.
On a daily basis as a life insurance agent I am exposed to many different types of people, and many different financial and medical situations. To the average person who is not exposed daily to all of the things which can go wrong in the human body, you may be thinking life insurance is a waste of money.
All it takes for someone to understand the importance of life insurance is to either be declined for life insurance coverage, or to receive the proceeds of a life insurance policy. Life insurance is a product which just sits on the shelf until one day it become one of the most important parts of someones life.
I see some definite advantages of life insurance for babies, but the most important is to protect future insurability. A permanent life insurance policy (with options to increase coverage) can ensure your child will never be without life insurance despite what medical conditions could happen. Anything can happen, and many diseases do not discriminate based upon age. The last thing a parent ever wants is to have to start a collection to bury their child. But, unfortunately this happens daily. Just check out your local news.
I have seen children who are less than a year old become uninsurable, and could possibly be for the rest of their life.
In the event this child may not make adulthood, the parents would have a huge emotional and financial impact. This is one of the reasons why I could see a definite need for life insurance for babies. If your family has a history health concerns later in life, why would you not lock in your child’s insurability, so they never have to worry about possibly declined for life insurance.
On the other side of the fence are those who feel life insurance on children is either taboo or a waste of money. The core of life insurance is to provide financial protection for the beneficiary to return them to the same shape they were in financially before the death of the insured. This is called indemnity. In the example, it seems babies and children do not need life insurance because they really do provide any economic value to a family unit.
Most people purchase life insurance because they either have financial obligations, want to protect their income, or a combination of both. Children however do not owe people money, or go to work to earn money so many people feel they do not need life insurance.
People also argue the statistics of a child or baby passing away is so low their is no point in purchasing life insurance because their death is so rare. Statistics do support this argument, but the families who do lose a child can be devastated both emotionally and financially.
So now we have compared both opinions on why babies “do” and “don’t” need life insurance. The decision now is up to you. If you feel it is a smart investment to protect them now and into the future than purchase a policy, they are very inexpensive. If you do not think a baby needs life insurance, than don’t buy a policy, but still be sure to purchase life insurance on yourself. Your baby still needs life insurance on their parents.
If you are interested in purchasing a life insurance policy on your child we would be happy to help.