An advisor whose parents insured him as a kid is sharing his own ambivalence about those controversial life policies.
My Own Advisor is a website chronicling one man’s journey to become his own financial advisor. A recent post discussed the pros and cons of parents buying life insurance policies for their children. The advisor himself being one of those recipients.
“I suspect life insurance coverage for children is not a high priority for many parents today and it probably shouldn’t be – I believe term insurance and disability insurance are more important,” wrote My Own Advisor. “However, as you get older, if you have a childhood life insurance policy, you might want to think twice about letting go of your insured past since it can help you and your loved ones in the future.”
For many the thought of one’s parents buying a policy for a child in the event that child should die is a morbid thought. However, some will argue that this kind of policy can be useful to pay for final expenses such as the funeral, etc., not to mention covering the expense of taking time off from work to grieve for your child.
However, when speaking with Niagara Falls insurance agent John Wilson, the advisor made it perfectly clear this isn’t something that happens very often today given most parents have bigger expenses to worry about such as their children’s university tuition.
More importantly it’s likely a better use of funds to put the premiums for a child’s policy towards increasing the parent’s coverage ensuring that should a major breadwinner die the children and the remaining spouse are financially taken care of.
“For now I’ve decided to keep my childhood policy and let the non-guaranteed dividends from the investment portion of the policy provide paid-up additions for the policy value,” wrote My Own Advisor. “Although the dividends paid will fluctuate the amount of coverage will keep creeping up over time and that’s nice if I ever become uninsurable or I wish to reduce my life insurance (term) coverage in the years ahead.”
It’s a personal choice for sure.
“I suspect life insurance coverage for children is not a high priority for many parents today and it probably shouldn’t be – I believe term insurance and disability insurance are more important,” wrote My Own Advisor. “However, as you get older, if you have a childhood life insurance policy, you might want to think twice about letting go of your insured past since it can help you and your loved ones in the future.”
For many the thought of one’s parents buying a policy for a child in the event that child should die is a morbid thought. However, some will argue that this kind of policy can be useful to pay for final expenses such as the funeral, etc., not to mention covering the expense of taking time off from work to grieve for your child.
However, when speaking with Niagara Falls insurance agent John Wilson, the advisor made it perfectly clear this isn’t something that happens very often today given most parents have bigger expenses to worry about such as their children’s university tuition.
More importantly it’s likely a better use of funds to put the premiums for a child’s policy towards increasing the parent’s coverage ensuring that should a major breadwinner die the children and the remaining spouse are financially taken care of.
“For now I’ve decided to keep my childhood policy and let the non-guaranteed dividends from the investment portion of the policy provide paid-up additions for the policy value,” wrote My Own Advisor. “Although the dividends paid will fluctuate the amount of coverage will keep creeping up over time and that’s nice if I ever become uninsurable or I wish to reduce my life insurance (term) coverage in the years ahead.”
It’s a personal choice for sure.
