Insuring children: Health and wealth for the whole family

 

The old view was that insurance was only needed to replace the income of a single breadwinner. Today, we understand that the whole family is financially connected and needs to be covered - even children.

Not long ago, when fewer women participated in the workforce, it was common practice to insure a husband, but not his wife. This strategy worked fine if the husband passed away first. His family would receive the insurance proceeds to pay for the funeral and cover day-to-day expenses while they got back on their feet.

But if the wife died first? The funeral expenses would have to come out of the family’s savings. The husband might not be able to afford time off work. And now, not only did he have to keep up with the usual bills, he might also have childcare and home support expenses to contend with.

What kind of life insurance covers children?

As a financial advisor, you understand how closely the health and wealth of every family member is linked. Any illness or death can bring a cascade of financial and emotional consequences. And, just as coverage strategies for husbands and wives have evolved, there is increasing recognition that responsible insurance planning should include children.

Here are two scenarios that are heartbreaking to imagine, yet firmly grounded in real-life experience. Perhaps you’ve read about similar stories in the news or seen something like it among your clients, friends or family.

- Child life insurance.

The Lee family suffered an unthinkable loss when their 4-year old son, Martin, was fatally struck by a vehicle while playing in his front yard. Although accidents like this are rare, statistics show that more than 2,000 Canadian children and teens pass away each year. A life insurance policy for Martin could have provided crucial relief for the Lees. It could have given them six months or a year away from work. It could have funded professional support aimed at regaining their physical and emotional strength. And just think about how much more acute the need for resources might have been if they were a single-parent family.

- Child critical illness insurance.

Alex and Elizabeth were thrilled to welcome baby Jonathan after years of wanting a family. Unfortunately, circumstances took a turn when the couple learned that Jonathan was very ill. Between surgeries and medical appointments, Elizabeth soon found herself without the time or energy to continue working. Over a period of months, the family’s savings were eaten away by household bills and mounting expenses. Having a critical illness insurance policy in place for Jonathan could have eased this financial burden considerably, offsetting everything from Elizabeth’s missed paycheques to the out-of-pocket costs for travel, treatments, nursing and more.

Starting the conversation

Insurance for children is not an easy topic, but it’s a necessary one. Our advice is to help parents put their own life insurance and critical illness insurance in place first. Once they feel comfortable with the process, you can begin to discuss the emotional and financial impacts that can occur if something happens to a child.

To keep the conversation grounded, you may be able to draw on examples that you know about personally, or draw from stories in the news. Always let the conversation reflect patience and compassion rather than pressure or fear-mongering.

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How much life insurance do I need for my child?

Parents should understand that the amount of coverage is designed around them. What would it take to carry them through a year without work, for example? Some families may appreciate life policies that accumulate a cash value or critical illness coverage with a Return of Premium rider, so that the policy can also have a second potential use - such as contributing to a child’s education.

In every family, there are connections between their health and wealth. While we always hope for the best, it pays to be prepared for the worst. If you have questions about how to use Beneva insurance products to protect families with children, your regional sales director will be pleased to assist you.