The law requires insurance companies that sell juvenile life insurance to have procedures in place to prevent people from buying this type of coverage for fraudulent purposes. Yet, a recent survey of the companies selling juvenile life insurance uncovered that some did not have written standards and others had standards that didn’t go far enough.

“No one should profit from the death of child,” said Kreidler. “The new regulation creates detailed safeguards that insurers must follow if they want to sell juvenile life polices in our state.”

Under the new regulation, insurers selling life insurance on juveniles after July 1 must:

Obtain and keep documentation that the person applying for the policy has an insurable interest in the juvenile’s life and would suffer a financial loss directly due to the child’s death.
Get the applicant’s signature and the signature of the parent or guardian, if the juvenile doesn’t live with the applicant. Also, the application must include the signature of the juvenile if they’re 15 or older.
Have justification for selling a life insurance policy in excess of the costs of the juvenile’s funeral, other death expenses or costs of mental health treatment for family members or loss of income to the family. The justification must:
- Identify the amount, if any, of other life insurance policies on the juvenile.
- State whether and to what extent the applicant is dependent on the juvenile for income or other support.
- Evaluate other life insurance policies on other members of the family and provide an explanation if they are not equivalent to the juvenile policy.
- Identify whether the overall amount of the juvenile life policy exceeds the annual household income and if so, why that amount was approved.
The new regulation took effect on Feb. 21. Insurers selling juvenile life insurance policies must comply with the new requirements by July 1.