Is it a good idea to insure your kids?

Some practical advice to a touchy subject. Part 1 of 2

This is a touchy subject for most parents. Myself being one, I had a lot of soul searching and analysis to do when it came to considering insuring my own children. Here is part one of two articles that will hopefully provide parents with a clearer analysis on purchasing insurance for their children.

The only reason parents should consider insuring their children is in case their children develop a serious illness. I know your teeth are clenching as you read this and unfortunately, it is a roll of the dice. This issue raises huge questions and in this article I will attempt to provide some sound advice for concerned parents.

If your child gets sick, what are the financial impacts for the family and the child?

  1. Time off work. Are you part of the few employees that is allowed leave to take care of your children? How will you be able to pay the bills if you need to take more time off then you are able to? During an illness not only does one earn less than an income, one will likely see an increase in medical expenses. If you are like most Canadians with high debt and limited savings, this can cause huge financial burdens. Do you want to have to choose between taking care of your sick child or going to work to pay the bills? I believe you and your child deserve better.

  1. Loss of employment. If your child needs you beyond the time allotted by your employer, you may need to make a difficult choice; to leave your employer. What will you do if this happens?

  1. Falling into major debt. You may be required to take on more debt just to make it to the end of the month. Money from family members can help but it will only go so far.

  1. Your child may no longer be insurable. Life insurance is important for most people. Imagine not being able to get any insurance or non-medical insurance with higher prices and limitations. This problem will persist for a critical illness policy and/or an income replacement insurance.

The scope of this article will focus on issues one to three, and number 4 will be explored in part two. The solution to these problems can be a critical illness policy for children. A child critical illness policy is enhanced beyond an adult policy due to the nature of juvenile illnesses. Every company covers various illnesses. The goal here is not to explore various companies and their offers. Your best solution would be to speak to an insurance professional and discuss your needs. It would be my pleasure to help you as well.

How does a critical illness policy for children work? Upon diagnosis of a critical illness, the beneficiaries of the policy, normally the child’s parents, will receive the coverage amount. Each individual family and person has different needs so explore your options. I believe the minimum coverage should be one year of net income, however, budget may be the restricting factor. Any amount of coverage is better than no coverage at all.

Some people reading this article may feel as though this may not happen to them or their children, and feel as though they would pay into this type of policy for no reason and essentially be wasting money. No one would wish a child falling ill upon any family; however, knowing some parents whose children have juvenile illnesses, they all wished they would have been aware of this type of coverage. In the event you still have this concern in your mind, there is an option known as “return of premium”. When you purchase this policy and your child is among the lucky ones to not experience an illness, you will get part or all of your premiums returned. Many people equate this to a “forced” savings behaviour.

Money won’t cure your child and it won’t make the emotions disappear. However, a critical illness policy provides choices. With choices comes the power to control your destiny and your child’s destiny. If you want to go to a private hospital or clinic, you will have the money to make that choice. Need to get an experimental treatment in another country, you will have the money to make that choice too. My children have critical illness and life insurance. I decided that this was my family’s best option. My wife and I had a scare with my son, 2 years ago. Luckily, we had the insurance in place prior to the episode. We never needed the policy and fortunately, there are no issues with my son. We are in the process of increasing the coverage and due to a test ordered by our pediatrician, we must wait for the results as the insurance carrier will not render a decision until after the results are in. My advice to parents is to speak to a professional and to investigate the critical illness insurance option. If you decide to get a critical illness policy, get the insurance as soon as possible, to avoid being trapped in a very unfortunate situation.

Life does indeed come at us fast! The important stuff that we often take for granted now can harm us later. In part 2, I will discuss life insurance and how it is used in tandem with a critical illness policy to protect your child’s financial future.

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