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5 Things to know about children's life insurance

ATLANTA (AP) -- Policies for children represent a small fraction of the life insurance market, but they made the news this week after a court hearing for a Georgia man accused of killing his young son by leaving him in a hot car.

Testimony and court documents revealed that Justin Ross Harris and his wife had two life insurance policies for 22-month-old Cooper Harris, one for $2,000 and one for $25,000.

Prosecutors have portrayed the 33-year-old Harris as an unhappy husband who was exchanging nude photos with several women. Defense attorneys say the death was a tragic accident. Harris remains in jail charged with murder and child cruelty.

The insurance policies were mentioned among numerous details from the evidence against Harris and weren't singled out by prosecutors in their arguments.

Still, the case has drawn attention to policies that families sometimes purchase for children. Here are five things to know about the children's life insurance market.

- HOW DO THE POLICIES FOR CHILDREN WORK? The policies are typically purchased by parents, grandparents or anyone directly related to the child, according to Steve Weisbart, chief economist for the Insurance Information Institute.

Premiums paid into the policies vary according to the terms. Generally, the higher the death benefit - what's paid out to beneficiaries if the insured person dies - the greater the premium. Insurers require that anyone buying the policy have an "insurable interest" in the person covered, meaning the buyer wants the person covered to actually live.

- INSURERS ATTACH CONDITIONS TO THE DEATH BENEFIT. Insurers require documentation of how a covered individual dies, and the policies will not pay out if the beneficiary is convicted of murdering the person covered.

- POLICIES CAN BE SAVINGS DEVICES. Life insurance policies typically have a cash value while the covered person is still living, with the amount based on premiums that have been paid over time. Often, a parent or grandparent buys a policy with the intention of giving the child the option later in life of using the policy as a cash source.

- POLICIES FOR CHILDREN ARE TYPICALLY FOR LOWER BENEFITS. Policies for adults, whether purchased individually or through employers, typically offer much higher death benefits than those purchased for children. Weisbart said a $5,000 to $10,000 policy is common, amounts that would help parents pay for a funeral.

- CHILD POLICIES ARE A SMALL SLICE OF THE OVERALL LIFE INSURANCE MARKET. Weisbart estimates that life insurance policies on children represent less than 1 percent of the overall life insurance market, both in terms of the number of polices and the dollar value.

Etti Baranoff, associate professor of insurance at Virginia Commonwealth University, added, "The nature of life insurance is to provide for economic security if the parent dies, not the other way around."

Join the discussion

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mom July 11 2014 at 12:49 PM

...says someone who has never lost a child and been through depression, leading to loss of work, and mental health services needed for parents and other siblings. Life insurance on children is extraordinarily helpful for families who tragically find themselves in that position.

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Heather July 11 2014 at 11:21 AM

I have never understood why a parent would buy life insurance on a child. Health insurance is obvious, but anticipating the possible death of a child!!! Even if the child is born with a terrible disease, I would hope that any money would be better spent elsewhere than anticipating the possible early death of one's baby. That's an incredibly morbid & pessimistic way to start a life! If anyone has a good reason, please speak up - I'm curious!

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9 replies
pepelaputr July 11 2014 at 5:34 PM

Many insurance companies push the idea that you should have a small policy to cover possible death expenses, The mortuary scam helps feed the insurance scam.
Child death policies may be a small par of the market, but companies have never shied away from making money.

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Sandy July 11 2014 at 12:52 PM

Right after I got married and had my first child I had purchased a whole life insurance policy on my self because at a young age they are cheaper as per the agent back then and I even paid the little extra for a disability waiver incase god for bid I ever got sick and couldn't work the policy would be paid by having that on there and while he was there he also told me I could get one on my newborn for almost nothing because of her age and after so many years it would pay for itself.... my policy was like 25 thousand and her's was 50 thousand... a few years later I become disabled and couldn't work any more the disabilitiy waivers paid for both policies..... and they are still in effect to this day some 20 years later so it all depends on how you view it... for me I didn't have big extra funds for a funeral expenses if something were to happen so having to pay small premiums worked better to know that if anything did GOD for bid happen to either of us at least we'd get buried.

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1 reply
anyteampa Sandy July 12 2014 at 3:59 AM

Well said Sandy!

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Sandy July 11 2014 at 1:06 PM

So don't assume just because someone buys life insurance they are guilty of anything..... sometimes they are doing what they need to do to make sure they aren't going to make their death a burden for anyone else when they are gone.... and I wouldn't want friends and family trying to find a way to pay for a funeral for me because I didn't have enough money sad to say but the world we live in today makes it hard to save for those rainy days w\hen we are all struggling and living week to week and everything keeps going up and up but the paycheck..... and with the way things are today parents don't have time to think they are working 2 and 3 jobs to keep a roof over their heads while raising children and always wondering if they will have enough money to make it thru till next pay day... this is the real world in which 80 percrent of us live in....

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1 reply
cocofrio9 Sandy July 11 2014 at 11:21 PM

Yes, but less than 1% of the population buy life insurance for children. It's not "normal", it's weird. It's strange, thinking your child could died and you getting money from his death. Only extremely cerebral people like you will think it's good to do so. Cerebral people and of course, killers.

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yellowlupine July 11 2014 at 4:37 PM

OK...so here is why 26 years ago I bought 2 insurance policies on my 8 year old child. Although I had a decent job, my son and I lived in a house that was larger than I would need on my own plus the property taxes were/are sky high in NYS So a part of the child support helped from my ex helped pay for the mortgage. If something happened to my son I would not have been able to even gain my thoughts and composure and would have had to try to sell the house - as I did not make enough to cover mortgage and the property taxes.
So, by insuring my son, I was actually buying myself some time to not up end my life and to give my self some time to decide what I wanted to do and where I wanted to move.
My insurance man, said he never heard of anyone doing this before,BUT thought it was a good idea and would use the idea in the future

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1 reply
cocofrio9 yellowlupine July 11 2014 at 11:27 PM

Great for you, but your child is alive, right? Mr and Mrs Harris's son is not. He is dead. He died in a car, in a temperature of 90 degrees. Both of his parents researched how long will take a child to died inside a car, in the heat.
You are obviously very cold headed and have a "preventive" mind, maybe you are super smart anticipating the death of your son and buying 2 life insurance. But still very creepy.

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zjlh July 11 2014 at 4:20 PM

Big deal, $27,000, are you going to kill for that?

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2 replies
DJ zjlh July 11 2014 at 8:36 PM

They did.

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1 reply
anyteampa DJ July 12 2014 at 3:57 AM

Already have them convicted, nice.

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cocofrio9 zjlh July 11 2014 at 11:28 PM

People kill for $50. What's your point?

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JohnPhillyguy July 11 2014 at 3:20 PM

Just because he had life insurance on his child means nothing. My parents had life insurance on all of there 5 kids....I see no big deal here

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liondog96 July 11 2014 at 9:30 PM

Life insurance. Money is so strong churches even drool for it.DC Sniper was the same way. He set up all those killings to take out his insured wife to look like a personal killing. And he'd be a rich man.

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JohnPhillyguy July 11 2014 at 3:21 PM

The younger u r the cheaper the life insurance is

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