Insuring Children

Article published on 31st July 2008

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As with most forms of personal protection insurance, the why's and wherefore's of insuring children is hotly contested within the UK.

No-one really like to consider their own mortality and the potential for unexpected death, but these are important issues to face whenever we think of purchasing life insurance. This situation gets even more acute when parents turn their thoughts to their children in relation to insurance and more particularly life insurance.

Some insurers recommend that all family members are insured because of their inherent value to each other, but this, in relation to children, just seems a bit foolish to me.

Unless a household derives its main source of income from a child within it (perhaps because that child is a prodigy or a successful actor or whatever) there is no income to replace if a child dies unexpectedly. Certainly the event will be distressing and traumatic for the deceased child's parents and siblings, but this does not mean that it is worth spending monthly premiums insuring that child 'just in case' he or she dies.

Unless you have a lot of disposable income this sounds to me like a great way to lose a lot of money.

I suppose the argument in favour of insuring a child is that if that child dies the parents might feel unable to work for a period of time - a period that would not be covered by any other sort of insurance. So while there is no proper income coming in because of the parents mourning their lost child instead of working, I suppose there is a notion that the parents could live off their child's life insurance.

But even this seems a bit pointless to me, because life insurance policies can take quite a while to come through, and also I doubt that most parents would grieve in such a way and for so long that they would be out of work for a length of time that could not be negotiated as compassionate leave.

If you have money to burn, it might be a good idea to insure your children as a form of future investment for them - so an endowment life insurance policy that changes and accumulates money as the child grows. Other than this though, I simply wouldn't recommend life insurance for children to most households.

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