When discussing life insurance policies, your children’s life insurance might not automatically come to mind. However, we encourage you to consider life insurance for children as it can greatly benefit their lives in the future.
Child life insurance is a life insurance policy purchased usually by a parent or grandparent to cover the life of a minor. In general, child life insurance is a permanent policy that covers the child’s entire life, even into adulthood. Coverage amounts are usually low, but the premiums are also locked in and won’t go up as the child grows up if the policy is a whole life insurance policy. Depending on the policy, the child will take ownership of the policy at age 18 or 21, and then they can decide to continue the policy or to cancel it.
While there are different types of life insurance policies, the best child life insurance policies are permanent participating whole life insurance policies. Term life insurance is another option for adult life insurance but is unavailable to purchase as a standalone life insurance policy for your children. Most insurance companies don’t offer term life insurance to those under the age of 18. You can also add a small amount of coverage for your children to your existing term life insurance policy if you choose. But whole life insurance is the preferable choice because whole life insurance offers the ability to build cash value.
Many people believe that child life insurance is most valuable for the parent or whoever the beneficiary would be, but that is not the only benefit for child life insurance. While there is a death benefit (the money typically meant to cover funeral costs and other expenses that are given to the beneficiary) included in these policies, there are many other advantages that benefit the child and their future.
While some advisors and financial planners tell parents it’s not necessary to insure their children because of the added cost and low short-term return, it actually can save you and your child money in the future and provide many benefits to them later on in life. Here are a few common arguments against buying life insurance for children and why we generally disagree with them.
If you’re still on the fence about child life insurance, here are some other frequently asked questions that will help you in your decision-making process.
In many cases, the price to insure a young child under the age of one is not even a dollar a day for $50,000 in face-value coverage. Life Benefits can provide a free life insurance quote if you’d like a better idea of the cost associated with insuring your children.
With life insurance for adults, the policyholder is often the person who is being insured and covered by the policy. With life insurance for kids, a parent, grandparent, or legal guardian would be the policyholder, even though it is the child who is being insured.
If you have other questions about buying life insurance for children or want to know how to set up the best life insurance policy to get the most cash value for your children to use throughout their lives, we are here to help. Schedule a free appointment, and we’ll help you make the right decisions for your kids’ life insurance.