You most often hear about parents buying their own life insurance policies so that in the event of an untimely death, their children will still be well provided for. It makes sense; the parent is the caregiver, so what would happen to the child if the parent didn’t have life insurance?
However, some people want to know whether or not it makes financial sense to buy life insurance for children. Taking a life insurance policy out on your child is a very personal decision, and for some parents it may feel like the right thing to do.
Life Insurance for Children
In the following article we will shed some light on buying life insurance for children. We have attempted to address the majority of frequently asked questions regarding this topic. However, if you have further questions please feel free to give us a call or leave a message below.
You may also be interested in our review of the Gerber Grow Up Plan which is a great policy for kids.
Why cover your child with a life insurance policy?
Whenever someone passes away there are the unfortunate expenses that come with funerals and burials which can add up to thousands of dollars. It’s unlikely that as a parent you will have saved up money for this purpose, meaning that in the event your child suddenly passes away, you will incur a lot of unexpected expenses. If you take out a basic life insurance policy to cover your child(ren), you won’t be financially strapped by your child’s death.
Aside from burial costs, there are other expenses that may arise after the death of a child. Some of those expenses may include:
- Lost wages. Losing a child is probably the most painful kind of death. In many scenarios, parents need weeks if not months off from work to grieve the loss of a child. If you have other children, this time off may be even more important as your other children will need extra care and attention.
- Professional Help. This may be in the form of a counselor for you or your children and/or you, a cleaning person to come and pick up around the house when you just don’t have the mental or emotional strength to do so, etc…
Losing a child is debilitating and the hardship will be compounded if you don’t have the help and support you need around you. Sometimes the best thing you can do for yourself is hire someone to help you get through it. The proceeds from your child’s life insurance will provide the resources you need to get through another day.
Can the cash value of my child’s life insurance policy be accessed?
If you get whole life insurance for a child then the policy may be used for policy loans or the cash can be withdrawn when your child becomes an adult. You may want your child to use this money for things like college tuition, living expenses, purchasing a vehicle, etc…
It should be noted that child whole life insurance may not be the best way to save money for your child’s college fund. The overall cash value of the policy may not be equal to the premiums paid if you did not get the policy on your kids at a young enough age. Plus, you may get a better return on choosing other investment options.
However, it’s reassuring to know that the money you have been putting into child life insurance isn’t a total loss should he/she live a long life. By knowing that you will get some of the money back as cash value, it’s easier to feel confident getting child whole life insurance. After all, like you, we truly hope you never need to make a claim on your child’s life insurance.
Reasons to get life insurance for children
Without sounding totally cynical, life insurance policies are designed for every “worst case scenario”. If you are the parent of a young child, you really have no idea what the future will hold. While we hope that your child grows up to be a healthy, high-functioning adult, there are many things that may occur along the way. Taking out a life insurance policy early on is a smart idea because later, when other factors come to light, your child may not be eligible. If you take a policy while your child is still a healthy then the policy will remain active.
Some of those unfortunate scenarios include:
- Substance abuse. God forbid your child hits the rebellion of teenage years hard, the life insurance policy you took out while he/she was still a child will still be valid. If you try to take out a life insurance policy on a teenager with any kind of substance abuse problem (tobacco, marijuana, alcohol, or illicit drugs), it may not be possible. Some hard drugs, such as crystal meth, may make it nearly impossible for your child to ever get insured, even when he/she is a recovered adult. If you take out a whole life policy, your child is insured from early on, no matter where life takes him/her. If you have a family history of substance abuse, insuring you child could be a gift to your grandchildren.
- Medical illness. If you insure your child while he/she is still healthy, the policy will remain in place even if he/she develops an illness as serious as cancer. If, however, your child is diagnosed with cancer prior to you buying a life insurance policy, it will be nearly impossible. Buying a life insurance policy is a pre-emptive measure. If one of your children does become terminally ill, it is likely to be very costly. Having a life insurance policy will make sure that following his/her demise, you are not adding to you loss by rendering yourself bankrupt.
You can always purchase you own policy with a child rider
Buying life insurance on your kids is not the only way to get coverage on them. Another great route to take, and often a less expensive alternative than buying an individual life insurance policy on each child, is to purchase a life insurance with a child rider.
A child term life insurance rider will cover all children under 18 for one set price. Therefore, if you have one child the price would be the same for a family of ten children. And if the child chooses to keep the policy, he or she can covert to a whole life insurance at age 18 or up to age 25 for children that are dependents.
Best Life Insurance for Children
There are many factors to consider when deciding on the best life insurance for children. As this is an important decision to make, it is crucial that you look compare your options before settling on a policy. Ultimately, you want to have the best coverage possible.
We at TermLife2Go represent dozens of the best life insurance companies in the market. We have no vested in pushing any company more than another; our goal is that you, the client, get the best possible coverage for your situation. If you would like a free consultation regarding life insurance coverage for your children, please get in touch with us today.
Thank you for reading our article, Life Insurance for Children. Please leave any questions or comments below.