Life insurance for babies?

[DMFA]

My mother-in-law who sells insurance tells me that our healthy 15 month-old son should have a life insurance policy.

Is this just a case of someone who sells a product trying to sell a product, or is this commonly done?  I'd be a lot more inclined to believe her if she hadn't tried to sell us a whole life policy...and getting a term policy on a healthy toddler has an extremely low likelihood of being needed.  I know I'd get more for him by putting the money elsewhere.

[jfoxcpacfp]

DMFA wrote:

Is this just a case of someone who sells a product trying to sell a product, or is this commonly done?

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BOTH.

It's a way to tug at the heartstrings of new parents and, as we all know, when emotions get stirred into financial decisions, the result is a cake that falls flat. Don't do it.

Why doesn't your MIL buy the policy herself? It's her grandson :-)

[The White Coat Investor]

DMFA wrote:

My mother-in-law who sells insurance tells me that our healthy 15 month-old son should have a life insurance policy.

Is this just a case of someone who sells a product trying to sell a product, or is this commonly done?  I’d be a lot more inclined to believe her if she hadn’t tried to sell us a whole life policy…and getting a term policy on a healthy toddler has an extremely low likelihood of being needed.  I know I’d get more for him by putting the money elsewhere.

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No no no. Don't buy insurance from people who don't recognize what insurance is for. Don't buy insurance from family members. Don't buy insurance from people who push whole life.

I mean, if you can't afford to bury him, sure, buy a $10K policy. But for most of us, if our kids died our need for income would go down. I wish I could get someone to submit a guest post advocating insurance for kids. That would be a very easy Pro/Con to do!

If you want to put money away for your kid, I'd do one of the following:

1) Roth IRA for earned income for their retirement

2) 529 for college money you want to maintain control over

3) UGMA/UTMA for money you want them to have at 18/21 for whatever they want but that you want out of your estate and want to take advantage of their lower tax rates with.

[LBKCLU]

I would definitely take a pass.

Your son relies on you and not the other way around.

Unless you are concerned about a future insurability issue, your money is better spent elsewhere.

[DMFA]

I mean, these are all the reasons why I said it wouldn't be a good idea. I think my wife just bought into the difficulty of having to say no to her mom (who is innocently biased and thinks she's doing the right thing) and some PMG kool-aid from some women who had an extremely unlikely catastrophe occur (like leukemia, and now is p much uninsurable). I think my MIL actually *did* get a whole life on him for like $100,000.

I showed my wife this article from Forbes so that she wouldn't think it was just me being my money-grubbing self: http://www.forbes.com/sites/barbaramarquand/2016/01/27/the-hows-and-whys-of-life-insurance-for-children/

But yes Jim/WCI, I agree, that'd be an excellent first article.

[uptoolate]

This is the insurance companies' 'Friends & Family' business model isn't it?  Just say NO!! Diplomatically of course.  And I wouldn't suggest that the MIL buy a policy - I would suggest a 529 as per WCI.

[MrsIMDoc]

DMFA wrote:

I mean, these are all the reasons why I said it wouldn’t be a good idea. I think my wife just bought into the difficulty of having to say no to her mom (who is innocently biased and thinks she’s doing the right thing) and some PMG kool-aid from some women who had an extremely unlikely catastrophe occur (like leukemia, and now is p much uninsurable). I think my MIL actually *did* get a whole life on him for like $100,000.

I showed my wife this article from Forbes so that she wouldn’t think it was just me being my money-grubbing self: http://www.forbes.com/sites/barbaramarquand/2016/01/27/the-hows-and-whys-of-life-insurance-for-children/

But yes Jim/WCI, I agree, that’d be an excellent first article.

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I love PMG (Facebook Physician Mom Group) and I also am on the PMG finance page, which I think was started by one of our frequent posters here who is awesome. I love both groups however my husband thinks I spend too much time on both.

That being said, I prefer to give financial advice on PMG rather than receive it.  Most of the people on both groups represent typical physicians with finances that are not "enlightened" by the WCI mindset. If I want financial advice or insurance advice I will post to WCI forum any day.

[G]

Wow, just wow.  I'm sorry that you're in a tough situation.  I guess it could be worse.  (I'm assuming/hoping that your father-in-law is not a plaintiff's attorney chasing OBs?)

I further presume you'll have your wife look at this page.  If not, you can tell her that I clicked on your question because I thought it was going to be one of those Nigerian princes asking for my bank account so that he could wire me 4 quadrillion dollars--you know a fun place to put snarky comments on a rainy Saturday afternoon.

[InsureIncome]

Life insurance and disability insurance are income replacement policies. Disability insurance replaces income loss during a period of illness or injury that impairs someone's ability to earn an income. Life insurance replaces the income loss due to unexpected death. If there is no income, there is no insurable interest, no risk of loss, since there is no income to lose.

You can protect against loss of medical insurability by insuring an infant/child but the benefit amounts available are nominal. Most insurers require that the parents own life insurance first before they would consider insuring the child.

Suggest buying actual stock certificates instead (cool wall art that may actually appreciate in value).

 

[eaglecap]

It does not make sense to buy life insurance for children.  My physician wife did find a post on PMG where many other physician moms posted that they purchased life insurance for their children.  Their reasons include loss of income if they quit working over bereavement and future insurability for the child if their child develops an illness.  If your wife is reading all of these crazy stories it might be hard to say no.

At the end of the day your mother-in-law's job is to sell insurance policies that may not be all that great.  When she is giving her sales pitch on children's life insurance to her next customer; she can include "My daughter and son-in-law are doctors and even they have life insurance for their kids".

With all that being said, I think you might have to buy the policy to keep the peace between the in laws.

Husbands of PMG need our own Facebook group for emotional support.

[DMFA]

We've got PDG, but it's mostly dirty humor. There's also Dads Married to Doctors, but there's a lot of resentment toward doctors in there.

[conniebird]

DMFA wrote:

We’ve got PDG, but it’s mostly dirty humor. There’s also Dads Married to Doctors, but there’s a lot of resentment toward doctors in there.

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Resentment towards their doctor wife???? Do tell.

[DMFA]

Apparently the doctor dads who are married to doctors and the non-doctor dads who are married to doctors don't seem to get along. I admit that's a second-hand observation from friends that are in it, but that's why I'm not in that group. I don't approve of that sort of vitriol.

[conniebird]

MrsIMDoc wrote:

DMFA wrote:

I mean, these are all the reasons why I said it wouldn’t be a good idea. I think my wife just bought into the difficulty of having to say no to her mom (who is innocently biased and thinks she’s doing the right thing) and some PMG kool-aid from some women who had an extremely unlikely catastrophe occur (like leukemia, and now is p much uninsurable). I think my MIL actually *did* get a whole life on him for like $100,000.

I showed my wife this article from Forbes so that she wouldn’t think it was just me being my money-grubbing self: http://www.forbes.com/sites/barbaramarquand/2016/01/27/the-hows-and-whys-of-life-insurance-for-children/

But yes Jim/WCI, I agree, that’d be an excellent first article.

Click to expand…

I love PMG (Facebook Physician Mom Group) and I also am on the PMG finance page, which I think was started by one of our frequent posters here who is awesome. I love both groups however my husband thinks I spend too much time on both.

That being said, I prefer to give financial advice on PMG rather than receive it.  Most of the people on both groups represent typical physicians with finances that are not “enlightened” by the WCI mindset. If I want financial advice or insurance advice I will post to WCI forum any day.

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Totally agree...I cringe at some of the advice given on the PMG finance group and any financial advice on the main PMG group.

[ZB60]

I am currently in my second year of med school, and we do have a 10k policy on our 18 month old son. If something were to ever happen to him, having everything paid for would be one less thing we had to worry about around that time. Of course still being a student, and only one modest income, it makes more sense for us than most readers here. This will change. Plus, it is only ~25 dollars per year. Roughly 1 dollar per pay period if I recall correctly.