Insurance may be something only ‘adults’ understand and appreciate. After all, children have more pressing concerns such as school, their social lives, and the growing pains of adolescence. But it is also important to teach children the value of insurance early on so they could appreciate how it could help them when they are of age. It’s a big wide world out there, after all, and they have to be ready.
Various institutions in Australia (and around the world) offer financial literacy programs for kids, but preparing your children for life has to begin at home. It can be quite the challenge, because the parent has to explain the advantages, types and benefits of having life insurance. It’s tough to explain the value of protection against risk, but it’s also challenging when there are so many choices as you begin to compare the market for life insurance. However, these are life lessons, valuable and long standing.
The key to making insurance and finance understandable for children is to make it accessible. First, the parent has to instill in the child’s mind that insurance protects their stuff when it breaks or disappears, and one of the things to explain is the value of life insurance. While this may be a sensitive topic to touch on, it pays to be ready for life’s challenges. It also brings a safe space for them to ask questions.
The best way to teach a child is to provide an example and to explain what happens when you have insurance versus not having a policy. Explaining that payouts can support his education and his basic needs even when you’re gone is a good example to orient him or her. Of course, it might a good idea to wait until your children are of a certain age to fully understand the topic.
One of the advantages of teaching a child about insurance is that it prepares them for the worst. Should anything happen to a parent, the child knows that he or she is taken care of. He will know that he can still continue the life he is accustomed to, and that his needs will still be met. He will still be able to go to school and the rest of his family wouldn’t have to worry about expenses like hospital and funeral bills.
At the same time, sufficient knowledge of life insurance will prompt the child to consider getting a policy when he is an adult, knowing that his passing wouldn’t jeopardize the quality of life of his own family. Life doesn’t stop after passing, but a good policy can ease the transition.
In this day and age where everyone is connected, and children barely entering their teen years are equipped with the latest tablet and smartphone, it is necessary to take advantage of technology to learn what’s important, and preparing for the worst is one of them.
It’s a big wide world out there, is your child ready?
Earnest Parenting: help for parents who want their children to be prepared for eventualities.