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November 21, 2019

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Life insurance for young children

Obtaining a small policy now could save you or your dependents from unplanned financial strain in the future

By Orrie Augsburger
Adviser Assistant at
Faith Investment Services
Bluffton, 419-358-4207

It may seem silly or morbid to purchase a life insurance policy for your young children. It is not a pleasant thought to think that you may potentially make a claim on the policy.

However, purchasing life insurance for a child is not just for having a death benefit when they are young. In fact, one of the significant advantages is financial security through continued insurability.

If a child is ever diagnosed with any potentially disqualifying disease (diabetes, AIDS/HIV, or other terminal illnesses) or makes poor personal choices with drug abuse or alcoholism or is involved in dangerous recreational activities like sky diving, scuba diving, motorized racing, or flight training, they are considered a high-risk.

During the underwriting process, a high-risk individual may be deemed uninsurable. Some reasons for being uninsurable may not be because of the child’s choice, but the result is still the same – uninsurability.

Once you or a child is considered uninsurable, it creates a significant financial risk for you or them in the future.

Take for example a young, seemingly healthy child who shows no signs or symptoms of Type I Diabetes until later in life. Likely, he or she will be able to live a long and fulfilling life because of modern technology and medicines.

Nonetheless, this child will be considered a high risk for life insurance and could be uninsurable throughout his or her life – unless the child already had a life policy in place before being diagnosed. Having a policy in place before any disqualifying diagnoses or lifestyle choices deem them uninsurable creates the opportunity for continuous insurability, as long as a policy stays in force.

Life insurance is an asset for various reasons to help secure financial stability in the future.

Right now, you and your children or other dependents may not need a life insurance policy. However, putting it off can damage your ability to get a policy in the future.

Having a small existing policy in place now that is convertible to a permanent policy could be a wise idea for continued insurability throughout life. Obtaining a small policy now could save you or your dependents from an unplanned financial strain in the future because of uninsurability. Starting a conversation with an agent or financial planner is a good idea to discover any risks that you're exposed to.