Chantal Marr on Life Insurance For Children in the Financial Post

Chantal Marr, President of LSM Insurance, was quoted in the July 26 Financial Post article by Melissa Leong titled “Should you buy life insurance for your kid?” Read on to discover what Chantal and two other experts have to say about life insurance for children.

Chantal Marr Quoted in Financial Post Insurance For Children
Chantal Marr Quoted in Financial Post Insurance For Children

When it comes to money decisions, it can be hard to figure out the right thing to do. Money is about power, emotion, morality, and security, among other things. So in this space, we gather personal finance luminaries to weigh in on a financial quandary.

This week’s question: Should you buy life insurance for your kid?

Chantal Marr, president of LSM Insurance: Yes, I’m a big believer in life insurance for children. I have life insurance on each of my three children. It allows them to have coverage which is locked in at an affordable rate regardless if they have a change in health down the road. This can be particularly advantageous if the child’s parents have health issues that are hereditary. Many financial experts argue against it because the parent and not the child is the financial breadwinner. I totally agree insuring the parent is more the crucial of the two. But anyone who has lost a child or knows someone who has a lost child realizes the emotional upheaval this can have on the parents. The biggest advantage of having life insurance on a child is it gives the parents the time necessary to properly grieve their child’s loss and be there for the surviving family members.

Ed Rempel, a certified financial planner with Armstrong Quaile Associates Inc.: Life insurance provides little or no benefit to the child. The main purpose of life insurance is to replace their income when they have dependents, which is typically not until age 25 to 30. Why pay a policy for 25 to 30 years just in case they might need it in the future? Any policy would be minor anyway. When your kids are married, they will probably need coverage of 10 times their income 25 years from now, which is likely $1-million to $2-million in future dollars. The dumbest idea is to buy whole life insurance for your child. I’ve seen this awkward situation many times. Clients in their twenties cashing in very low return policies that were inflicted on them when they should be building wealth. Parents have many more important uses for their money, such as life and disability insurance for themselves, their retirement goals, and their child’s RESP.

Mark Halpern, a certified financial planner, trust and estate practitioner and president of illnessPROTECTION. com: “Life insurance on children should be discussed as part of a comprehensive tax and estate planning discussion with parents, especially if there is a family medical history of things like cancer, heart problems, colitis, diabetes, etc., because the best time to buy life insurance is when we are young and healthy – qualifying is easier and the premiums are much lower. Other reasons for buying life insurance on children include using it as an education-funding vehicle or for those of higher net worth, as a tax-free transfer of wealth from parents to children or grandchildren.

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3 Comments

  1. Ami Maishlish 07/28/2014 at 2:05 pm

    Each case and set of circumstances is unique and individual. Chantal makes a good point in her remarks relating to future insurability; however, even at the relatively low rates of inflation, the value of the insurable dollar would likely be halved by the time that the child reaches adulthood. While in some cases there may be some justification for the purchase of insurance to guarantee the option to buy insurance (aka “GIO”), that also deserves to be put in its rightful place within the order of priorities. To the above, I would also note that the pricing of life insurance relates to the amount of coverage being purchased, with notably higher pricing for smaller amounts of coverage.

    Relating to Ed’s comments, in some cases replacement of income may be the primary purpose; in others it is not. As noted each case and set of circumstances is unique and deserves to be approached individually with the focus on the best interests (not just “suitability”) for the client.

  2. LSM Insurance 07/28/2014 at 2:10 pm

    The one point that often gets overlooked is having life insurance on a child gives the parents the time necessary to properly grieve their child’s loss and be there for the surviving family members.

  3. LSM Insurance 07/28/2014 at 2:13 pm

    This was the most debated question in our Life Insurance – What The Experts Own Series in which we interview 21 Financial Experts – Ami is one of those experts and for good reason. link to lsminsurance.ca

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