The arrival of a new baby is sometimes (often, always) a source of euphoria in the family. Parents and even members of the extended family rush to meet the material needs of the unborn baby and work towards creating the best environment for their arrival. From planning the design of their bedroom, to buying a new bed, new furniture, stroller, blankets, clothes, plush toys... SIGH! It’s a lot to think about and prepare. When baby finally arrives, we are well equipped with regard to material goods, but what about more intangible things like the child’s life insurance?
Some parents think about it, others do not. Some people just prefer not to think about it! Which is quite normal since a newborn impersonates the very beginning of life! But come to think of it, there are many advantages to having such an insurance from the birth of this little being.
Let’s have a look at the main scenarios and strategies available.
Scenario #1: A gift for life
You can take a permanent life insurance policy that will be transferred to them one day after which they will pay the premiums. You then benefit from the young age of your child to obtain lower premiums for a permanent insurance. The insured amount chosen in these cases is often lower than that taken with term insurance. It should be noted that, despite the child's young age, permanent insurance is offered at a higher price than temporary insurance. Moreover, regarding the insured amount, remember that the cost of living tends to increase over time. It will not be the same when your child is 50, 60, or even 90 years old.
Scenario #2: A safe protection
You may want to obtain life insurance with a larger sum insured and thus protect the insurability of your child. What does it mean to protect insurability? Unfortunately, it happens that during their life, some people become uninsurable or more difficult to insure as a result of health problems. Protecting insurability allows you to cover your child with an amount, for example $ 250,000, before anything bad happens to their health. This insurance will remain intact and at a suitable price. This way, you can guarantee the insurability of your children by obtaining a larger amount through term insurance (10, 20 or 30 years). The cost of insurance is then lower, which allows you to take a larger amount of insurance. Term insurance is renewable after the term chosen and can be changed at any time to become permanent. Life insurance taken when you are young and healthy is an asset to consider. No one knows what the future holds.
Scenario #3: Be done with payments
Why not opt for a permanent life insurance that will be paid in 20 years? At the end of the term, for example in 20 years, the policy will remain active, but paid in full. Wow! What a pleasure to know that there will be no more payments to make! The parent will be able to transfer the property of the policy to their child as a gift.
Scenario #4: Good and cheap
Last but not least, you have the option to add a child rider to your policy as parents. For a fraction of the price, some companies offer coverage for children and the price remains the same regardless of the number of children. This rider usually covers children to adulthood. At age 21, children will have the choice to either drop the coverage or convert it to a personal insurance.
As you can see, there are several possibilities to achieve the same goal, that is to protect your loved ones financially.
There is something for all desires and budgets. The real question to ask yourself is: why do you want to insure your child?
Your advisor is here to guide you in this process. But just as important as insuring your child, the first step is to confirm that you are properly insured. Therefore, it’s important to assess your own life insurance. We believe that if something happens to you, you would not want your dependent child to be burdened for years to come. We know it's not a nice topic for you, and it is not an ordinary task. That's why we are here to guide and support you.