The death of a parent is one of the most severe traumas that a child can suffer. The loss of a parent causes emotional distress and deprives the orphaned child of love,nurturing, values, information and discipline. The loss of a productive household member also diminishes the financial resources available for investments in child health and education. This paper investigates the effect of parental death and disability on investments in child human capital using panel data sets from Indonesia and Mexico. We find that children with a deceased parent are more likely to drop out of school, are less likely to start school and are generally less healthy than non-bereaved children.Controlling for changes in household economic status (consumption) does not reduce the negative effect of parental death on children’s health and educational status. Our results suggest that bereaved households may be able to insure investments in children’s human capital against the purely economic impact of parental loss, but are unable to insure these investments against behavioral factors related to the presence of a parent in the household. These results highlight the need for emotional based support for orphans to go hand in hand with monetary aid.