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Even unborn children can get life cover

By Isabelle Coetzee

They nick their hands while hanging from trees, and scrape their knees as they trip over their toys. But like the Nokia 3310, children are durable. So why do some parents feel the need to take out life cover for them?

Statistically, South African children (ages 1 - 18) are least likely to succumb to illness or injury (with the exception of infants). However, if a parent has the misfortune of losing a child, life cover would be able to assist with funeral costs, family counselling, and medical bills.

According to Johann Boshoff, head of OUTsurance Life, “There is still a real cost for the funeral in the unfortunate event that a child passes away.”

However, the main purpose of life insurance is to atone for the long-term financial consequences of losing a loved one.

“In theory, there’s not a big insurable interest in kids as they are not yet contributing to the income of the household and thus would not result in a liability should they pass away,” explained Boshoff.

But often the motivation for taking out life cover for a child revolves around making sound financial decisions for the child’s future.

Forbes highlighted the following two reason’s parents and grandparents choose to take out life insurance for minors:

  • To aid them in qualifying for life insurance later in life: If a child develops a medical condition, they might not be able to get cover. By pre-emptively taking out cover, parents can ensure their children will be covered. However, some parents may believe that it’s an unlikely situation that isn’t worth preparing for.
  • To act as a different type of savings account: The parent can borrow against the cash value of the policy (at the cost of a surrender fee) and use this money towards paying for university expenses or purchasing a home. But it can also be argued that a different investment vehicle would exclude the service costs of supporting their life cover.

Craig Baker, CEO of MiWayLife, confirmed that, in terms of the Long-Term Insurance Act, parents can obtain life cover for their children – even before they are born.  

“However, limits are in place for the amount of cover a child may be insured for,” he added.

 

Age

Cover

Unborn to 6

R10 000

6 to 14

R30 000

 

“These limits are in place to protect the lives of children and manage the risk of having large amounts of cover on the life of a child,” said Baker.  

“At MiWayLife, we allow parents to cover their kids on the funeral benefit so that if they were to pass away, funeral costs would be covered,” he explained. 

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