$1M of Term on 8 Month Old

[Tothetop]

This is why I am an insurance agent and not an English major.

Let me correct that and put it in context as that is too much of a blanket statemnt.

Term insurance policy on an 8 month old child is prohibited. Carriers that would offer coverage would offer a permanent policy first before we even discuss how much.

 

[YouGotMyMoney]

New agent AND their prospect is Indian AND they "want" $1 mill on a newborn?


https://www.youtube.com/embed/kdr_GiWXRws

 

[Robert Barney]

Usually a policy on a child has to be within a certain range comparable to the parents coverage. It is unlikely any company would write a million on a child if the parents have say 250k, unless there is a special exception (entertainment for example) that would create a need for more coverage.
Check your underwriting guidelines.

In my second year of selling life insurance (1980) I sold one millions dollars on a child that was less than a year old.

Need I point out, that adjusted to inflation, the 1 million would be more like 3 million today (wild guess).

Larry is correct, there needs to be a financial basis for the coverage, and in the case I was selling there was.

Normally I would not recommend insuring a child, and that policy was the only one I remember selling. I should also point out that I find it revolting when children have policies when their parents are carrying too little coverage.

 

[pfg1]

The issue I have with this question is that its asking about "term". There is no need to write term on a child, unless something is wrong with the child. Perm, absolutely and $1m is not a stretch at all, assuming all the other factors line up. Many wealthy families write large perm cases on their young children.

 

[Robert Barney]

The issue I have with this question is that its asking about "term". There is no need to write term on a child, unless something is wrong with the child. Perm, absolutely and $1m is not a stretch at all, assuming all the other factors line up. Many wealthy families write large perm cases on their young children.

I agree.

My view is term is for problems that are temporary and eventually go away. You insure the income of a breadwinner using term, because eventually a breadwinner will stop earning income (aka retirement).

Permanent is for insurance needs that never go away. The most obvious need is for estate planning, to make sure cash gets into the hands of an estate at the moment of the insured's death, to take care of some financial issue in the estate. That was the situation that gave rise to the $1m I sold on a child (infant) and that was an exception to the rule situation.

Having said that, Pruco no lapse UL for about $1,500 per year for $1m is almost term-like pricing. An 18 year old, in the best of health, would pay $490 per year for 30 year term, and that's cooked when they turn 58.

But so far I have not heard the purpose of this insurance, and if the reason for it can't be justified to the company, the likelihood of getting it issued would be in doubt.

On another note, if there was $5m on the father and mother, $1m on the child could make sense just from an insurability perspective. Need to hear more about the case.

 

[rousemark]

The issue I have with this question is that its asking about "term". There is no need to write term on a child, unless something is wrong with the child. Perm, absolutely and $1m is not a stretch at all, assuming all the other factors line up. Many wealthy families write large perm cases on their young children.

Perhaps they want term is because they have bought into the Ramsey/Orman garbage that permanent insurance is always bad.

 

[Robert Barney]

Term insurance policy on an 8 month old child is prohibited. Carriers that would offer coverage would offer a permanent policy first before we even discuss how much.

I doubt that it is prohibited.

When Genworth was still writing term, they offered it.

 

[Tothetop]

Term insurance on children? Yes. Not children riders. I'm talking individual term policies on children.

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Companies do the "under age 4 1/2, the parents must have 4 times as much insurance as applied for on the child rule."

And if I'm not mistaken, I think both are a NY state DOI rule not the insurance company.

 

[scagnt83]

If its Convertible Term, then it could make sense to put it on a child. Especially if there are financial constraints keeping them from getting the Permanent Policy now. If there is a true need, then Convertible Term would be suitable imo. But if its not convertible, or its only convertible for a short period, then I cant see it being suitable.

I know that some carriers will not write Term on a child. I think some still do. I can't tell you which ones though.

 

[VolAgent]

I agree.

My view is term is for problems that are temporary and eventually go away. You insure the income of a breadwinner using term, because eventually a breadwinner will stop earning income (aka retirement).

Permanent is for insurance needs that never go away. The most obvious need is for estate planning, to make sure cash gets into the hands of an estate at the moment of the insured's death, to take care of some financial issue in the estate. That was the situation that gave rise to the $1m I sold on a child (infant) and that was an exception to the rule situation.

Having said that, Pruco no lapse UL for about $1,500 per year for $1m is almost term-like pricing. An 18 year old, in the best of health, would pay $490 per year for 30 year term, and that's cooked when they turn 58.

But so far I have not heard the purpose of this insurance, and if the reason for it can't be justified to the company, the likelihood of getting it issued would be in doubt.

On another note, if there was $5m on the father and mother, $1m on the child could make sense just from an insurability perspective. Need to hear more about the case.

Would the real Bob Barney please stand up?

Wow, that was very well stated and reasoning I completely agree with.

At the risk of stereotyping, they are Indian and it is their first born son. But without seeing a multi-million dollar policies on the parents, I would run away from this.