Buying Life or Critical Illness Insurance for Children

May 26, 2023


From a first glance, purchasing life insurance or critical illness insurance for a child may seem wholly counterintuitive, as no one really expects a young and healthy child to have a need for either policy. Unfortunately, there are some circumstances where having either policy may be necessary.

Of all the various things a parent may need to worry during a child’s lifetime, purchasing life insurance or critical illness insurance is usually not at the top of the list. Unfortunate things can happen for any reason, and if you desire that extra peace-of-mind, having insurance policies in place for your child can offer financial security. In this blog post, we will detail why parents may consider the purchasing of critical illness insurance or even life insurance, and what these policies may do to support families during especially difficult times.

What are some reasons why someone might purchase life insurance for children?

Contrary to popular belief, there are actually numerous reasons why a family or a parent/parent(s) might choose to purchase either a critical illness insurance or life insurance policy – or life insurance policy with a critical illness rider. It may not be as cut and dry as purchasing life or critical illness for a fully-fledged adult with continuous income and dependents, but there are reasons. Those are as follows –

Financial protection in the event of a tragic loss.

Look – no one wants to think about what might happen if their child passes away and, in a perfect world, no one should ever have to bury their child. It’s not something anyone should even have to consider. If an unexpected event did occur resulting in death, the parent or surviving family may be saddled with the leftover medical bills, funeral expenses, and similar costs. And, after a tragic instance, you might expect that a family may find it difficult to return to life as normal, or even go back to work. With life insurance, there would be a financial cushioning that could serve as support during a difficult time, and can help to cover any of the family’s unexpected, additional expenses arising during the time of loss.

Access to life insurance for later in life.

This reason is far less morbid to think about than the potential loss of a child; rather, it’s more about financial security. If that child wants to obtain life insurance coverage later in life, but they develop a medical condition in the meantime, they might have a hard time. Purchasing a policy for your child that they can later inherit and make payments for themselves upon reaching 18 ensures that they may continue to have access to a life insurance policy, regardless of any pre-existing conditions. And, what’s better, they’ll be able to lock in even lower rates!

Critical illness supports families who have children diagnosed with medical conditions.

Similar as the first point, critical illness can help families whose children have been diagnosed with serious illnesses or medical conditions. If the child is diagnosed with organ failure, heart disease, cancer, etc., critical illness insurance payouts may be used for any range of different expenses, such as accommodations for your child, treatments not covered by provincial health plan (like non-traditional medicine or potentially physical therapy.) Critical illness insurance ensures that your child can get the best possible care, without having to worry about dipping into long-term savings or even that child’s future education fund. Considering the impact that children with medical complexity have on Canada’s healthcare system, and on the parents, having insurance can be a lifesaver.

Critical illness could pay for experimental/alternative treatments.

Although Canada has a great public health system, not every form of treatment is covered. For experimental or alternative treatments, you may use a critical illness insurance payout to cover any resulting expenses. Moreover, universal healthcare won’t cover prescription drugs, either. Critical illness can fill in any gaps where traditional healthcare falls short. That being said, still do your own due diligence and familiarize yourself with the terms of your policy, including its total amount, exclusions and limitations, and premiums.

Is life and critical illness insurance cheaper for children?

Generally, yes. Life insurance and critical illness insurance are both far cheaper for children than they are for adults because children are viewed as much lower risk than adults for insurance companies. The same goes for health insurance. Children are healthier, have fewer pre-existing medical conditions, and it tends to be that coverage amounts for children are much lower than for adults. As a general rule, this is why we always recommend investing in life insurance younger.

That being said, still expect variation between policies based on the kind of policy purchased, the coverage amount, child’s age, health status, etc. Shop around with an Excalibur Defender for the best prices available.

Security for the future

All in all, purchasing life insurance or critical illness insurance for your children is not something you might consider as a “must-do,” but it’s something worth considering when you’re looking at your child’s well-being overall. These policies do offer peace of mind and financial protection for the parents (or guardians) and they’re also there to ensure that, if something happens, that child can have access to a wide array of treatment options, accessibility features, and more. Consider discussing the benefits and drawbacks of purchasing either policy with your friendly, local insurance broker at Excalibur.

We’re happy to answer any additional questions you may have about acquiring life or critical illness insurance for your children, and whether that’s the best option for you and your financial situation. Give us a call today or request a free quote.