Unfortunately serious conditions such as leukaemia affect a high proportion of children. Parents cannot afford to overlook the benefits of children's critical illness cover, says Nick Kirwan
When we have children our whole lifestyle has to change to accommodate their care. That is why it is important to think of the whole family's needs when arranging protection for your clients.
When you discuss the need for protection with your client, you need to make it clear it is more than just having enough cover to pay off the mortgage if they should die. Do not let them forget about other living expenses, such as household bills, food and childcare. Get them to think about what would happen if the main wage earner could not work and the effect this would have financially on the household.
Taking this thought a step further, it is important to be aware of the effect a children's illness might have on your client's lifestyle. Emotionally it would be something no parent would ever wish to go through, making it a distressing and difficult time. As well as the emotional impact, it might have an impact on the family financially, which could make it difficult for them to focus on what is important ' giving all their attention to their sick child.
There is no denying that broaching the subject of children's critical illness might be difficult. It is hard enough trying to get adults to face up to the possibility of contracting a serious illness themselves, never mind the thought of their children being critically ill. However, it is essential they do so, because if the worst does happen then the last thing parents will need is financial worries on top.
Before you can start to look at the benefits to your clients of having children's cover it might be a good idea for us to look at the facts surrounding children's cover and to explode a few myths.
FACT: Child cover claims are just as common as claims for total and permanent disability (TPD) cover.
Intuitively, we might imagine children are unlikely to get a critical illness so it is not an important cover to have. Nothing could be further from the truth. Claims for children's cover are more common than many people might imagine and it may come as something of a surprise they account for just as many claims as TPD.
FACT: Most child cover claims are for leukaemia.
The incidence rates for most illnesses vary by age and children tend to get different illnesses from adults. The most common cause of claim for children is leukaemia, which is covered under the cancer definition and accounts for around 90% of all children's claims made.
MYTH: Families do not need children's cover.
A common myth is that children's cover is not needed because the illness would not affect the income of the main family bread-winner. Again, the truth is somewhat different ' the financial health of the family depends on the physical health of its members.
The money from the child's claim could be used to fulfil some childhood ambitions, such as a trip to Disneyland. But of course, there are other uses, such as:
• Making alterations to the home ' perhaps moving a bedroom or bathroom downstairs to make it more accessible, building an extension, or making the home more accessible.
• Buying a vehicle that allows easy access for a wheelchair user.
• Investing the money to provide a financial head start for the child.
• Paying for specialist medical treatment, perhaps only available outside the UK.
FACT: Many parents also have a need for income when a child is seriously ill.
It is not just a lump sum that parents need if a child is critically ill. There is a real need for an income as well. When a child is ill, it is not the doctor they call for, it is their parent. Above all, at times like these parents will want to be with their child, no matter what the cost. This may mean making changes to working patterns, perhaps switching to a part-time job, or even giving up work altogether.
There may also be other priorities ' for specialist nursing care or special needs requirements, such as schooling. After the large additional costs, the smaller ones can start to add up as well. For example, the cost of frequent trips and overnight stays to attend medical appointments for specialist advice or treatment.
MYTH: All policies offer children's cover.
With such a glaring financial need, it may be surprising to hear there is little in the way of income benefits available to help parents in these circumstances. The majority of policies will do nothing to help and parents taking time off work, or working part-time would not qualify for statutory sick pay. Neither will unemployment cover or income protection help ' neither pays out for this important need. Of course, there are areas where the State will help ' for example, by providing social care and special needs education, but as with most State benefits, financial help is almost non-existent and the services can be patchy depending on local resources.
So choosing a critical illness (CI) plan with child cover is one of the few ways parents can protect themselves.
MYTH: Only blood children are covered for children's CI cover.
So who should have a CI policy with child cover? The obvious answer is anyone with children or anyone planning to start a family in the future. But there are other people too. Families often come ready-made these days and it is increasingly common for couples to have children from previous relationships. It is good news some policies now include cover for stepchildren by marriage.
FACT: Buyback can apply to children's cover.
When it comes to family protection, more advisers than ever are recommending buybacks now ' especially those which allow both life cover and CI cover to be replaced a year after a critical illness. The good news is that this buyback also applies to children's cover. However, to ensure you have the best buyback for your client it is worth checking out whether it includes a 'gap year.' This is where the child cover stops in the period before the main cover is reinstated. Not all policies are the same and in some cases children's cover can come and go. Imagine having a child diagnosed with a critical illness during this coverless gap year.
No one likes to think they might need to claim a child is critically ill ' but that is what taking out protection is all about.
Nick Kirwan is head of marketing and product development at Scottish Provident
The six-point child cover checklist:
1. What is the maximum benefit?
2. Are adopted and stepchildren by marriage covered?
3. Is there a limit on how many children are covered?
4. Is there a limit on the number of claims for children?
5. If both parents have their own critical illness cover, do they get a double payout if a child is critically ill?
6. Can it pay an income as well as a lump sum?
