Life Insurance: Kid-Tested, Mother-Approved?

Life insurance companies have a new, unconventional sales strategy: selling life insurance policies on children.

The fact that most life insurance companies are asking parents to purchase life insurance for their children can seem to be incongruous, almost like buying your three-year-old a car with the idea that it will be cheaper when they are older. The idea seems absurd, but life insurance companies have recently strongly favored these sales strategies.

 

The most interesting thing is that insurance companies do not directly say that they are urging parents to purchase life insurance for children. Instead, the companies have coined some enticing phrases, such as “college plans,” “grow up plans,” or “get started plans.” Such pitching terms end up confusing parents and grandparents to fall into their trap, playing on their emotions to get an easy sell.

 

Realistically, children do not need life insurance and these companies are only interested in making easy profits. They just want to take advantage of the fact that parents and grandparents love their children and can fall for any plan that appears to benefit their kids. There is no problem with selling life insurance to adults as it is a wonderful retirement plan but extending the same to children amount to conmanship.

 

Life Insurance should retain its Original Purpose.

 

Life insurance companies should stick to the plan’s original purpose, as it is an excellent long-term financial plan. Purchasing a life insurance plan ensures that your family or dependents are fully protected from economic loss when you die. It is true that a person’s young family benefits from life insurance as it gives them the much-needed financial security.

 

On the other hand, a family is less likely to suffer any considerable economic loss after an unfortunate death of a child. The death of a child leads to an emotional loss, but the issue of financial loss, which is the main incentive behind the purchase of life insurance, is tough to justify.

 

Life insurance companies understand that they cannot sell life insurance for children by focusing on economic benefits, which is why the pitch is a more indirect approach to take advantage of the parent of children. The fact remains that these  “grow up plans” are nothing but life insurance for people who do not need, or even really want, coverage.

 

According to life insurance companies, there is a possibility that some children may not qualify for life insurance when they become adults, and it is a good idea to take advantage of the cheap rates. However, the fact is that until middle age, life insurance will remain relatively cheap in the vast majority of cases.