Have you been searching for life insurance for a child? In researching the topic term life insurance for children, I noticed there are few options available to today’s consumer. Either you have to get a whole life insurance policy or the policy has to be a term rider dependent upon the parent having life insurance. In my opinion, the most common options seem to be fundamentally flawed.
What if the parent is uninsurable for some reason? What if a parent can’t afford to purchase life insurance for some reason? The lack of child term life insurance options surprised me. But when you think about it, it makes sense why there are no options. Look no further than the economics of selling life insurance for children.
In fact, a brief internet search search yielded the following January 2016 Forbes article, Barbara Marquand quoted financial advisor Joseph Alfonso as saying, “I struggle with thinking of reasons why it would make sense,” and Rutherford Asset Planning’s CEO, Keith Amburgey, as saying” A smarter financial move than buying life insurance is to stash money into an emergency fund, which could be tapped for any type of crisis.”
In all of my insurance agent sleuthing, regarding life insurance for kids, I found that 99.9% of the insurance and financial services professionals vacillate between the following schools of thought:
- purchasing life insurance for children is bad, invest your money elsewhere.
- it’s a good idea but look for strings attached like high premiums and dependency on parents policies.
- Grandparents like it because they know they should have purchased it when they were younger
In reality, like any insurance policy, no answer is absolute. What approach is the right approach? Are financial planners right? Is investing every extra penny the right thing to do?
Let’s face it, the odds of childhood deaths are so extremely low, it makes it hard for insurance companies to set a fair premium without over-charging. The economics of selling standalone term life insurance policies for children say, its’ too cheap. Monthly payments are too costly unless its a whole life policy. On the other side, insurance companies can ill afford to pay agent commissions on a term life policy for kids.
As a result, generally you can only get life insurance on a child if either the parent has a policy, or you purchase a whole life policy. Fortunately for me, I have that advantage over the typical journalist. As a licensed insurance agent, I have friends that sell life insurance. As a result, we can dive a little deeper into the world of life insurance and find the hidden gems.
Forbes should have interviewed David Walker
David Walker is a general agent and Branch Manager for Catholic Life Insurance Company. In our conversation, he told me that his company has a novel approach to the problems associated with providing life insurance for kids. Their policy, is called a “Just for Kids” and it features a standalone term life insurance policy for children between the ages of 14 days and 16 years old.
Child term life no brainer
I’m going to make a bold statement and say that this by far is the lowest cost life insurance you can get for a child. This policy answers the affordability questions posed by financial planners. At the same time, this is truly a standalone children’s term life policy. When I say there are no strings attached, the price says it all. Catholic Life’s Just for Kids policy only costs $100 for a $10,000 or $200 for a $20,000 policy.
If there was one catch, I would say that you have to pay it in full. So, imagine this, you have a newborn child or grandchild and you want to make sure they get life insurance. While your financial planners tell you not to buy it, it will cost too much, you can now tell them you can get a convertible policy from a 117 year old insurance company issued in just a few days and for a one-time payment of $100 and get coverage until age 22. What do you think your financial planner is going to say? If he’s smart he’d tell you to call Catholic Life Insurance.
How to get a Just for Kids policy
In our discussions, Walker stated that the policy has a one page application with a few questions. So getting a policy is as simple as filling out the application and sending it in with a $100 payment. Policies are usually issued within a few days. From there, based on location, policies are either mailed or delivered by a local agent.
The Just for Kids term policy is a full blown term life insurance policy. As a result, like the more expensive industry standard policies, this policy is also convertible (up to 5 times the face amount of $10,000 or $20,000) to any other Catholic Life Insurance product at age 22 without evidence of insurability.
As a result of these guarantees, Walker says that both parents and grandparents love the policy. “Not having to worry about paying a monthly premium for a child removes a lot of stress especially for new parents that can’t afford a lot of insurance…” As for grandparents, Walker says that grandparents love the one time payment. For a retired parent or grand parent that doesn’t want ongoing payments. The Just for Kids solves an tremendous problem in the quest to insure children.
A class by itself
This policy Catholic Life Just For kids term life insurance policy is truly in a class by itself. In my research to confirm that this is the only policy of its kind, I found one other company that does this. At three times the cost with fewer benefits and limited coverage for deaths before age 5, the policy was not worth mentioning.
Founded in 1901, Catholic Life Insurance provides a full portfolio of life insurance policies backed by over $1.1 billion in assets with $2 billion in policy premiums in force. Let’s just say, this company isn’t going anywhere any time soon. Because the company is a Fraternal, premium dollars go back into local communities through scholarships and community activities.
On the downside, Catholic Life only operates in the Texas, Oklahoma, New Mexico, Arizona, Louisiana, Mississippi, and Florida. Unless you live in one of these states, you’re out of luck. Maybe that’s why so many insurance and financial services professionals have no clue this policy exists.
In the end, there’s no right or wrong answer, whether you go with the $100 life insurance policy, the policy equity index policy, or the whether you invest your money. It’s up to you.
For Inquiries about the Catholic Life Just For Kids, click here to request more life insurance information.