Insurance: it’s all about protecting what is most important to you. Your investments. Your health. Your business. Your family. So should you buy life insurance for your children?
But how far does that need for protection extend? Life insurance for an adult is a great way to make sure your family is comfortable after you’re gone, but is there room for such a policy for your child as well?
The answer is quite simple: No—most of the time.
Nor is life insurance for your child even really possible. But there are policies that can provide the same level of protection in the same circumstances. Here’s what you need to know:
Under New Zealand law, there are plenty of restrictions for insurance for minors—specifically those under 10. The payouts are low, and the policy cannot be owned directly by the child until they are 16. This is to protect children against those who would open a policy and then hurt them in order to claim on it. You would be hard-pressed to find an insurer who will offer life insurance to a minor.
The reality for the average Kiwi is that even if they wanted to buy life insurance for their child, they wouldn’t be able to.
Read more: 6 tips to lower your premiums and protect your family.
There is some life cover available for those between 10 and 16 years old—but this is rare. The reality for the average Kiwi is that even if they wanted to buy life insurance for their child, they wouldn’t be able to.
Nor would they really need to.
Children dying is thankfully a rare phenomenon. In 2015, for example, about 1.8 per cent of all deaths recorded were of those under the age of 10, according to Statistics New Zealand. Compare that to those over 60, who made up 86 per cent of all deaths.
Moreover, the main point of life insurance is to keep dependents comfortable or to pay off debts. Young children don’t have either of these, rendering a life insurance policy pointless. Furthermore, some insurers even offer a funeral benefit on adult policies or as separate accidental death cover, so you would already be covered for that expense under an existing policy.
Most of the time, you can’t get life insurance for your children—and there wouldn’t be much point to it even if you could.
This said, your children can still benefit from other insurance policies. Health insurance, for example, is of great benefit to children. It’s not difficult either—most of the time, you can cover your children as part of your own policy.
If you get in early enough i.e. before any major illnesses or accidents, you can lock in a policy that covers your young one for their childhood years. But even more importantly, once they grow up and get their own policies, they can do so without further underwriting. That is, they don’t need to worry about additional exclusions being put on their policies as a result of their childhood accidents.
If you get in early enough i.e. before any major illnesses or accidents, you can lock in a policy that covers your young one for their childhood years.
These benefits are at their most effective when you get in as early as possible. In fact, you may want to purchase health insurance as soon as the child is born. Do this within 90 days of their birth, and most insurers will cover them immediately with no exclusions (the exception being congenital health issues which are automatically excluded).
Trauma insurance is also a great way to protect your kids. It acts as a more specific form of general health insurance, triggering if a specific problem stipulated in the cover crops up. For child-specific trauma cover, this often includes child-specific considerations, such as bacterial meningitis or childhood leukemia.
In these cases, parents often have to take time off work to care for their child—sometimes for months or even more. Considering how there are far fewer stay-at-home parents in the modern world, needing to take such a significant amount of time off work could create significant strain on the household budget. Trauma insurance can help alleviate that issue.
Furthermore, some adult trauma policies include child protection in their life cover as well—but there is also standalone cover for more specific issues. Generally, this will kick in once your child is three years old, but it will depend on your insurer.
Life insurance for your kids isn’t easy to get, nor is it often necessary. But there are still great insurance options out there to help protect your family.
Health insurance ensures future insurability and covers common childhood issues like wisdom tooth removal or broken bones.
Life insurance for your kids isn’t easy to get, nor is it often necessary.
Meanwhile, trauma insurance allows parents to take more time off work and pay for care in case of more serious health concerns.
Between the two of these policies, as well as diverse insurance coverage for yourself and your partner, you can rest easy knowing that your family is fully protected in case of disaster.
For more tips on how to better protect your family and reduce your insurance premiums, download our free guide.