Life Insurance and Children with a Disability
April 1, 2010
Historically many people, especially the older generation, purchased life insurance policies on their new-born children. The parent would be the owner and beneficiary of the policy. Many of these policies were known as “industrial policies” or “debit policies.” An agent would visit the home every week or month with a little book or tablet and record the premium payment, which ranged from as low as 15 cents to $1.00 a week. There were several purposes for these policies, including providing a death benefit, adding cash value, and guaranteeing insurability. While this quaint method of handling life insurance business has changed over the years, the need for insurance has not.
When purchasing life insurance designed to benefit a child with a disability, careful consideration of several facets of the policy is required. Usually, there are four parties to a policy: the insurance company, the owner, the insured and the beneficiary. One should be certain that the correct owner and beneficiary are named because there can be adverse consequences if the policy is not issued properly. Normally the insurance agent will review these options with the applicant before the policy is issued or applied for, but sometimes, and particularly if one applies for a policy over the internet, the care and attention that should be given to these issues is not provided.
Should insurance be purchased on the life of a child with a disability? In many cases the child may be disabled to the extent that he or she is not insurable. Even if insurance is available, it may be “rated” due to the health of the child. …
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by: Hyman G. Darling