Childrens Life Insurance is sometimes misunderstood in that people think it is being purchased with the idea of potential for financial gain. Or that there would not be a financial loss if a child died as they do not earn an income that needs replacement.
It is true that no one should profit from a death, especially a child’s. And it is true that children do not contribute financially to the families income. With that said, it is a good idea to consider some life insurance for children. First, be sure that there is enough coverage on the parents.
Imagine for a moment that your child died. This is hard to do. Painfully hard. You might even refuse to do so. If it really happened your family would be devastated. You would likely not want to work for a long time. This is a key reason why you might want life insurance on a child. There could be an emergency fund through the life insurance that would enable you to take extended time off work to care for your family, and yourself.
A second, less powerful, reason is that you would need money for a funeral. Imagine having to worry about money for a proper funeral and burial for your child.
It is obvious that the vast majority of children live to adulthood. When they do the life insurance that their parents purchased may be beneficial in the following ways
Insurability - If they are uninsurable there is a policy in force. A young adult might be uninsurable due to their occupation, lifestyle, or health
Lower cost - buying coverage at such a young age locks in low premiums
Transferable - Parents can transfer ownership of the policy to the child when the child becomes an adult
Build value - some policies will build a cash value that might be of use to a child (generally this will not be as effective as an RESP and both life insurance and an RESP are recommended).
Premiums are very affordable depending on the type of policy.
Visit Life Insurance in Ontario for more on buying life Insurance in Ontario
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Always speak with a licensed insurance representative about your specific situation.
This site is general in nature and there may be errors or ommissions