Monday, May 15, 2017

TIL ... (Insuring Children edition)

Reading the comments to a Washington Post article or op-ed can be variously amusing, dismaying, and/or educational.  Today, on the paper's seemingly non-controversial view that Too many children are killed for insurance money (although at least one wiseacre asked what number the Post thinks would be appropriate), commenters weighed in on bona fide reasons to take out life insurance policies on infants and small children.  Here are some highlights:
  • To pay for funeral expenses
  • "Ours have them because I have an autoimmune disease that makes me uninsurable. Thank goodness I had life insurance before I acquired health problems. We took out policies for our kids to protect their insurability, since once you have a policy they cannot cancel it and they also have to allow guaranteed additional purchases when the kids reach adulthood. Since the origin of my disorder is unknown, there may be a genetic component. Buying policies now protects our kids in the future." - mokinsbean
  • "Locking-in the low premium is good, but locking-in insurability is even better. Kids are generally healthier before they hit their teens, so getting a permanent policy while they are healthy can be one of the best moves you'll ever make." - Bastages
  • "[O]utside the rich, developed world, the elderly often depend on their children to provide and care for them. If you live in such a place, insuring your children makes good sense. It might make sense to those Americans who come from such places and have no old-age safety net other than their children." - 99miles
  • "As others have noted, there has been selling of relatively small amount life insurance for children for many decades. One goal was to lock in a low rate per $1,000 of insurance." - Davidhoffman6692
  • "1) the premiums will be very low, so the parent is locking them in for later when the child grows up and wants insurance for themselves, at which time the parent can turn over the policy to the grown-up child, who can then make their spouse the beneficiary; 2) the child could borrow against the policy to pay for education, maybe at a lower rate than other educational loans; 3) if the parent is sending the child to private schools, then the parent would recover the costs of schooling if the child dies while still a minor." - Arise-and-Shine
And of course this all-too-common scenario for the vast number of film-maker parents who insure their own children after casting them in lead roles for a major motion picture:
  • "You are making a motion picture and will incur a major loss if a key (child) actor dies before the movie is finished - you might well want to insure against that risk." - Wal Stir
But ladymidnight2u points out a significant caveat: "I would suspect that in that case all actors are insured, including kids, but only for that one project. Not merely until natural death occurs." 

The op-ed also singled out New York for its maximum life insurance limits for juveniles, which presumably is intended to allow parents and guardians to purchase reasonable amounts of insurance for foreseeable bona fide purposes, while weakening the financial incentives to kill vulnerable children in their care:
  • Newborn to 4½: limit is the greater of $25k or 25% of the applicant's own life insurance.
  • Over 4½: limit is the greater of $25k or 50% of the applicant's own life insurance.
I suppose this allows parents who are very wealthy (or possibly, very worried) to get extravagant life insurance policies for themselves and their children.  If the applicant-parent is, in fact, very wealthy, presumably they won't be motivated by the financial windfall.  If the applicant-parent merely values life insurance very highly, this allows them to put their money where their mouth is, so to speak.  

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