Life Insurance for Kids?

[MommyLiberty5013]

In general, I am not an advocate of LI for children since they are not bread winners and have no dependents to support. However, now that DS4 has had the seizure trouble, I am possibly rethinking this.

 

What about buying a policy on each of the children that they could keep in the event they cannot be approved later on in life for LI when they do have income and dependents?

 

If I got something for them now, they could keep it as they age and have some level of protection if they ever develeoped some condition or disease that at that time would prevent them from ever getting LI.

 

Thoughts? Do any of you have LI policies on your kiddos?

 

 

[Ravin]

The only life insurance I have on my kids is one through my work. I'm fairly sure it only covers them until they reach adulthood.

 

 

[Carol in Cal.]

In general, I am not an advocate of LI for children since they are not bread winners and have no dependents to support. However, now that DS4 has had the seizure trouble, I am possibly rethinking this.

 

What about buying a policy on each of the children that they could keep in the event they cannot be approved later on in life for LI when they do have income and dependents?

 

 

 

I did this.

I'm glad now.  For privacy reasons I don't want to say why.

[marbel]

I think it used to be common for kids to have life insurance.  My mother used to talk about "the insurance man" coming around every {interval: week, month?} to collect the few pennies her parents paid for life insurance policies for the kids (8 of them).  She was born in 1916, btw.   When she died, I found the policy:  $5000, still payable.   When she was a kid, that was a heck of a lot of money!  

 

That said, we do not have life insurance on our kids.  I think your idea may have merit, though.  

[QueenCat]

We've always had it through dh's work. Around $1 a month for a $15,000 policy that covers both kids until age 26, unless they get married or join the military before then. If you don't have access to group insurance, you may have difficulties getting it with the pre-existing condition with the seizures.

[prairiewindmomma]

It costs 10K to bury someone, more or less.  Children aren't magically exempt from dying.  Car accidents, cancer, infections....those are all good reasons to buy life insurance, even if just in a small amount, regardless of someone's medical history. And, generally, funerals tend to come after extensive medical bills when children are involved; it's not the easiest time to dip into financial reserves that have already been hit hard.

 

I realize that is a side topic from your OP, but I'm bringing up the obvious for people who are reading in.

[City Mouse]

I do have a small whole life policy for each on my kids. We started those about 10 yrs ago and and we pay about $7 per month for each of them. Once they are paid in full the kids can keep them forever if they choose to do so.

 

We did this- not as an investment- but to have just in case. After dealing with family member's funeral, we did not want to have to worry about the cost of the funeral if something were to happen to one of our children. there is no way we could come up with $10-15,000 cash to pay for a funeral.

[Guest]

My parents got it for each of their children.  It was only enough to cover burial expenses (which is sad to think about but it was practical, as well...they were on such a tight leash financially that having to come up with the money out of regular income would have been devastating).  It capped at about $1500.  Providentially for me, they did not get to use it.  

 

The insurance is still in effect (I am 60), and the dividends have long paid for the insurance.  I have named my son as the benefactor so when I die, there will be at least that much money to cover my burial expenses.  

 

Unneeded insurance always looks like a waste of money in hindsight.   But I think what my parents did gave them a certain amount of financial confidence.  I don't think they would have purchased it for ME to have life insurance, however, and I had a *boatload* of pre-existing conditions.  The thing about setting aside money for an insurance policy is that it deliquifies the money.  I would at least consider the option of putting the same amount of money into some sort of investment account.  If my parents had done this, the amount of money could have grown to a meaningful amount that I could have used for a down-payment on a house, and I would not have to die to get it.  

 

That said, insurance has its purposes.  Just don't try to make it serve another purpose.

 

 

[Wabi Sabi]

We have $10k on each child. Dh and I have life insurance through State Farm, and the policy for the kids was added on at no additional cost to us.

 

We just had to pay for a funeral for my MIL. Even choosing the most affordable casket/vault/viewing options available, it still cost us $11k, and that didn't even include a plot or a headstone. Yes, a cremation without a service at the funeral home would have been more affordable, but she very much wanted to be buried next to her husband and have a traditional funeral, so we honored that. 

So seeing how much it cost, I'm glad we have something. I hope to never need it, but if the unthinkable should happen, at least we'll be able to cover the expenses that will incur. In fact, I kinda think maybe we don't have enough, because the $10k won't cover enough for a plot and a headstone and the time off from work we would need... :( 

[YaelAldrich]

My parents got that Gerber baby life insurance when we were babies. I thought it was a waste of money until my sister's death in January. Her husband didn't have the money to bury her, so my husband and I and my parents picked up the costs. We could've handled the expenses but that insurance money was enough to pay for most of the expenses. My policy is in my hands now and will hopefully never be needed.

Edited August 16, 2017 by YaelAldrich

[MedicMom]

We have a rider on our life insurance that covers each of our kids. My grandmother has also purchased life insurance on each of her great grandchildren and pays the premiums every year. I believe it is good until they are 21, and then they can keep it or cash it in. While it sounds morbid, both my grandmother and my mother buried one of their children unexpectedly. Funeral and burial costs were a huge deal for them, and this is something my grandmother can do for her great granchildren despite a limited income.

[MommyLiberty5013]

Thanks for the posts. I understand on the burial aspect. Thankfully, we would be pretty okay monetarily if we ever had that happen to one of our kids.

 

I guess one PP answered it for me. I am more worried kids wouldn't be approved as they got older (and needed it for their own families) in case of preexisting conditions, so I could do it now for them preemptively to pass on to them as they become parents/adults.

 

I have some calls to make.

[MommyLiberty5013]

I did this.

I'm glad now. For privacy reasons I don't want to say why.

How much and what type of policy? If I may ask.

[SKL]

My mom bought a policy for us kids when we were young, like 40 years ago.  When I was in my 20s she turned it over to me.  However, it was more expensive than the much larger $ policy that I was able to buy at that time, so I let it lapse.  I guess time will tell but I don't think it was a good use of her limited funds when I was young.  But I appreciate her thinking of us.

[3 ladybugs]

I am seeing things on here that say that a funeral has to cost X and I don't think that is entirely true. 

 

A couple of weeks ago I had the 11th anniversary of giving birth to my triplets who all passed. I was in a funky mood and I was on you tube when I saw a channel called "Ask a Mortician". I started watching it and I have learned a lot about the funeral industry because of that recently. As Americans we tend to ignore death, we don't want to talk about it, see it or anything. Because of this, we can be talked into things that we wouldn't ordinarily be talked into because of our grief. I would encourage everyone here to look at her channel. Yes some of it is not about the funeral industry per say. But look at the videos that are. It is stuff that honestly we should all know so that when a loved one dies, we are not stuck paying for something that we don't need. 

 

https://www.youtube.com/user/OrderoftheGoodDeath

 

For the record, when my children died I had them cremated. I didn't want a funeral because I didn't want people to look at me and feel sorry for me. I also didn't want to share that with people that never met my children. Consequently, we paid about $200 per child for their "processing".

Edited August 17, 2017 by 3 ladybugs

[maize]

I have a child rider on my own term life insurance, it covers the children with a fraction of my coverage and has an option to convert to a whole life policy when they reach adulthood. It wouldn't be a large policy but it would be something.

[maize]

Child rider on an adult policy is great for a large family as all children are covered under the same low cost premium. I don't think I could afford individual policies on each child.

[Prairie~Phlox]

My mom & grandma both have a Gleaner Life Insurance policy on my kids. Dh still has a Thrivent policy on him that his parents started & still pay on. I believe my mom has a pilicy on me from somewhere as well. Plus what we have through dh's work. Which is quite a bit.

[Lanny]

IMO unless there are special medical reasons involved, the Breadwinner is the one who needs the life insurance. The family is dependent upon him/her for their income.   

[SKL]

I think that as long as you have enough money or credit to pay for a modest funeral and burial, you don't "need" insurance on the kids, and personally I consider it financially unwise for most, but I don't mean to insult anyone who has it.

 

I could understand buying a whole life arrangement if the child has a condition that makes him/her unlikely to be able to buy (or afford) life insurance as an adult.

[maize]

IMO unless there are special medical reasons involved, the Breadwinner is the one who needs the life insurance. The family is dependent upon him/her for their income.

OP is concerned about her children's ability to purchase insurance adults (when they may have families they themselves are responsible for) because of medical issues. Buying young before significant issues develop is one way to ensure that some insurance is available to them as adults.

 

Also, in response to your comment about the breadwinner--a family is also usually dependent on the work of a stay at home parent. We have insurance on me because it would be very, very expensive to hire out all the un-paid work I do to keep the family running!

[StephanieZ]

IMHO, life insurance for kids is both unnecessary and creepy.

 

Also, it's highly unlikely any amount you purchase now for a 4 year old will be useful when that kid is 40 (35 years from now) and might have dependents. 

 

The most sensible policies for most folks are cost-effective 20 year terms that provide a big payout for a limited time (while they have dependents and haven't yet built enough wealth to provide for them). 

 

When dh graduated from vet school in 2000, we bought a "big" policy for him  . . . and a smaller one for me . . . 10 years later, we bought a policy FOUR TIMES the value of his first policy (on top of the first one) and a few years after that, another policy, bringing his total insurance to about 6 times the value of that first "big" policy. That "big" policy would now only cover about two years of current family income/ expenses -- a drop in the bucket. . . Back in 2000, it would have covered more like 6 years . . . The time value of money is complicated . . . Insurance is complicated . . . 

 

When I was 4 years old, my parent's house cost 50k -- which was probably around 2 times their family income. It is worth about 700k today. I'm sure when I was 4, if they'd bought a "big" policy for ME, that would have been a what . . . 50-100k policy. Today, with 3 dependent kids, that amount of money would be nearly meaningless to their security if one of us died. We have about 2 million dollars in life insurance today . . . *That*, combined with our assets, is enough to take care of our responsibilities to them . . . So, extrapolating into the future, I'd say, if you can afford to buy a policy 20-40x the value of your current home, then, that would be meaningful. But a tremendous cost and surely unavailable for children . . . If you can afford those premiums, put them in an investment account instead. That way, the time value of money will be working FOR you instead of against you. 

 

If you want to provide for your kids, then I'd bulk up YOUR savings, so you can help later if needed. If you really want to set aside money for a particular child (i.e., special needs, serious health issues, etc.), then look into setting up a special trust . . . but I wouldn't put any substantial money in a child's name or a trust w/o good advice from a qualified expert. 

 

 

[ChocolateReignRemix]

In general, I am not an advocate of LI for children since they are not bread winners and have no dependents to support. However, now that DS4 has had the seizure trouble, I am possibly rethinking this.

 

What about buying a policy on each of the children that they could keep in the event they cannot be approved later on in life for LI when they do have income and dependents?

 

If I got something for them now, they could keep it as they age and have some level of protection if they ever develeoped some condition or disease that at that time would prevent them from ever getting LI.

 

Thoughts? Do any of you have LI policies on your kiddos?

 

The only policies we carry are riders on our personal policies.

 

I do know families who have purchased insurance on their children with known medical issues to guarantee some level of coverage.  Generally what you would do is buy a policy for $X, with the option to add a multiple of the initial coverage at a later time with no health exam. Going only off of memory from when I was licensed to sell life insurance (which I never did but was part of a licensing requirement for a job), the multiples were usually from 2x-5x of the original policy.

 

The problem I saw was that most of the policies I saw were for around $10,000, were somewhat expensive for that level of coverage, and even at the 5x multiple (which also has an additional premium) the coverage isn't enough for most families.  At the same time, something can be better than nothing in dire situations.

 

I definitely wouldn't recommend doing this for all children in the family.

[mytwomonkeys]

We have 10k on each child. I think it's $100 a year or less. It will cover the cost of funeral basically.

[MommyLiberty5013]

The only policies we carry are riders on our personal policies.

 

I do know families who have purchased insurance on their children with known medical issues to guarantee some level of coverage.  Generally what you would do is buy a policy for $X, with the option to add a multiple of the initial coverage at a later time with no health exam. Going only off of memory from when I was licensed to sell life insurance (which I never did but was part of a licensing requirement for a job), the multiples were usually from 2x-5x of the original policy.

 

The problem I saw was that most of the policies I saw were for around $10,000, were somewhat expensive for that level of coverage, and even at the 5x multiple (which also has an additional premium) the coverage isn't enough for most families.  At the same time, something can be better than nothing in dire situations.

 

I definitely wouldn't recommend doing this for all children in the family.

Yes, I am interested in the "guarantee of some level of coverage," aspect of LI for a child and not in the $10k to pay for a funeral, which we could do on our own.

 

This is in case DS4 couldn't get his own coverage in the future (LI is harder to get as one ages, especially with pre-existing conditions).

[PinkyandtheBrains.]

 

 

We just have riders on our personal policies. It would cover funeral expenses.

[Liz CA]

I think it used to be common for kids to have life insurance.  My mother used to talk about "the insurance man" coming around every {interval: week, month?} to collect the few pennies her parents paid for life insurance policies for the kids (8 of them).  She was born in 1916, btw.   When she died, I found the policy:  $5000, still payable.   When she was a kid, that was a heck of a lot of money!  

 

That said, we do not have life insurance on our kids.  I think your idea may have merit, though.  

 

I wonder if in those days, kids were insured to pay for potential funeral expenses if something happened to them.

 

We never had life insurance on kids but there shouldn't be a problem securing a policy in young adulthood.

 

[Bootsie]

I wonder if in those days, kids were insured to pay for potential funeral expenses if something happened to them.

 

We never had life insurance on kids but there shouldn't be a problem securing a policy in young adulthood.

 

One of the reasons it was more popular to purchase whole life insurance policies for children in the past was that there were not as many other types of savings and investment opportunities, nor were there as many life insurance options for a child to choose from once they became an adult.  If parents want to purchase life insurance policies for their children, it is best to view it as insurance--you are paying a little in case there is not financial harm in the rare event that something happens; on average, it is not going to be a positive financial outcome.  

 

Even if a child becomes "uninsurable" some time in life, many employers provide a basic amount of life insurance at a relatively low cost which does not require proof of eligibility. 

[G5052]

We have them for ours. At DH's work, if we got life insurance on me, the kids came along for very little.

 

Two years ago my bachelor uncle died alone in a hospital with no will, so it took awhile to get things lined up to verify the nearest kin (me) and get the authority to his house. Then he was a hoarder. So no idea what he had or didn't have until they could go through it all, which took weeks.

 

I ended up paying for it with a zero percent credit card we had gotten for a trip. I didn't hold a service because all of his friends had died or left the area. He was cremated and had a military burial in a VA cemetery. Even under those circumstances, it was about $4700 in an expensive area of the country.

 

Eventually the estate was able to reimburse me, but it taught me that you have to be prepared. If not for your immediate family, for those who live far away and may have to make arrangements. 

[luuknam]

I have no personal experience with this, but with Google I found this:

 

http://www.us-funerals.com/funeral-articles/low-cost-and-free-cremations.html

 

Now, I'm absolutely not counting on being able to get anybody cremated for free, but there's simply no way that I'm going to pay $10k or w/e either. 

 

Wrt OP, I'm seriously skeptical that you could get anywhere near enough life insurance on a kid to be worth it as an adult (you'd be talking about hundreds of thousands of dollars). But, like a PP said, many employers offer some level of life insurance without regard for pre-existing conditions.