Samantha Gowers

Samantha Gowers

Many of us have heard of or even own critical illness insurance on our own lives because we recognize the financial impact it could have – our healthy spouse will likely take time off of work, we may need to hire extra help around the house for our kids, we possibly need to travel to find the best care, or maybe the drugs or treatments are not covered. But many of us have not considered the impact of one of our kids having an illness.  I can almost guarantee you haven’t considered buying this coverage for your kids or grandchildren as a gift!  It’s hard to think about anything bad happening to our kids, but the reality is it happens and when it does, the financial impact could be catastrophic.  All of the expenses listed above would continue to be a reality, but to add to it, there would probably be a drop in both parent’s incomes.

There are a number of critical illness plans available for children that not only provide a benefit for the common illnesses found in adult plans (cancer, heart attack, stroke, MS, etc.), but also include child specific illnesses such as Type I Diabetes, Cerebral Palsy, Cystic Fibrosis, and so on. If the child is diagnosed with a listed critical illness and survives the required period of time, typically 30 days, the  benefit is payable and can be used to provide cash flow to support the extra expenses and loss of income.  This allows you and your family to focus on what’s most important – getting your child the care needed to make him/her healthy.

Not only will these plans help while your child is young, they are also able to be continued into adulthood to provide the now-adult with financial protection as he/she enters the workforce, gets a mortgage, starts a family, etc.  

One plan in particular that is available has premium refund rider option which automatically refunds 75% of premiums paid at the later of 15 years since the start date of the policy, or age 25, while maintaining the coverage on your child. If the policy is no longer required anytime after the later of 30 years from policy inception or age 40, the policy can be cancelled and 100% of the premiums not already refunded, is returned.    At age 18, it is possible to add a conversion option to the policy that allows the child to change the plan to a long term care insurance plan anytime between ages 60 to 65 without having to provide evidence of health.  The long term care plan provides a benefit for life to cover home care or facility care needs later in life.

For example, consider insuring a one year old for $75K of critical illness insurance for less than $60/m. At age 18, we can add the long term care conversion option.  At age 25, $16,875 would be refunded and could be used to help with education costs or debts, and the now- adult continues to have this valuable protection up to age 75.  If the now-adult has an illness, he/she receives $75,000 tax-free.  Otherwise, anytime after age 40 the policy could be cancelled with a refund of the remaining premiums paid, or the policy can be converted to long term care insurance to provide for asset protection in retirement.

 For less than $100/m, this same policy is available but completely paid for in 15 years with no further premiums owing.  

The gift of critical illness insurance to a child or grandchild might not be the first thing that comes to your mind…it is almost certainly not on their wish list. But the benefits they could receive in later years to help fund school, houses, marriages or an illness are invaluable.  In the long run, they will thank you.

For a full list of Critical Illnesses please click below.

Critical Illnesses