The idea of purchasing life insurance for children is a difficult subject to approach for parents.
The truth is that life insurance is designed to be bought by adults and the children of adults. Life insurance for children can provide a number of features for parents. There are also some disadvantages to buying life insurance for children.
On one end, parents always want to take steps that will benefit their children in the long-term. Any good parent would want to be able to relieve their child of future financial burden as much as they can.
Providing savings for college is difficult enough without taking into account any other unexpected costs your child may come across. This is why some choose to look for life insurance products for their dependent children from an early age.
However, purchasing a child’s life insurance policy might also seem like a grim sort of investment.
There are pros and cons when it comes to child life insurance. Every family is living under different circumstances. So, it may or may not be in the parent or child’s best interest to purchase life insurance.
Learn more about life insurance for children and if it makes sense for your family.
What is Life Insurance for Children?
Child life insurance is similar to life insurance for adults.
It is a type of policy designed to protect children who are under the age of 18.
The goal of purchasing life insurance for children is to provide a safety net for parents. It can be an effective way to protect against financial hardships, like illness or accidents.
You can choose to buy life insurance for your child that are permanent, long-term investments for their entire life. Another option is to buy something that is valid only for a certain period of time, where you would be expected to pay everything off when your child reaches a certain age.
Some parents purchase life insurance for their children because they don’t want them to suffer from financial difficulties if something were to happen to them.
The money can help provide a comfortable lifestyle in the event that the child passes away or becomes disabled, such as for covering burial expenses. There are also some families who believe that life insurance can provide security for their children during adulthood.
When it comes to buying life insurance for your child, you generally can only buy whole life insurance policies.
The Positives
Life insurance for children can provide a variety of benefits. Buying life insurance for children can provide peace of mind for parents. It can help parents sleep better at night knowing that their child is financially secure.
1. Provides a Peace of Mind
If you’re trying to be proactive and prepare for the worst-case scenario, life insurance might be a good affordable option. However, parents should consider simply adding a “child rider” to their own life insurance policy. It’s cheaper and will still provide a death benefit.
It can also provide peace of mind to parents who are worried about their children’s financial future. This can help protect them from future hardships and allow them to enjoy their child’s adulthood without worrying about money.
In addition, parents can also feel secure knowing that their child will be provided with a comfortable retirement plan or inheritance if something were to happen to them in the future. The money would provide for the child’s long-term needs and ease financial burdens for the parent.
2. Takes Advantage of Low Costs
The rates can be lower the younger your child is when you set them up with whole life insurance. Of course, the price will differ based on the coverage, benefits, and any additional features you choose.
For example, you can purchase life insurance coverage that can last up until your child is 60 years old or more. You can also make sure that the coverage and benefits may be adjustable once they reach mature age and can decide what they want for themselves.
This can help save money on premium payments and allow parents to more comfortably pay off their policy over time. You can also look for plans to offer a discount for buying multiple policies, or when you have children, or for adding a rider to your insurance.
3. An Investment Vehicle for Your Child
Investing in life insurance can be a good way to teach your child about money management and how to take care of themselves financially. They will learn about how much things cost and what options are available for them when they reach maturity age.
They will also learn about how different kinds of investments work and be able to start making decisions about their own financial future early on in life.
4. Prepares You and Your Child for the Worst
If any unfortunate life events were to happen to your child, you would want to be prepared.
If you have a family member who has a serious illness or who passes away, life insurance can provide financial security for you and your family.
These policies protect the parent and family in case something were to happen to the child. The money is there in case something were to happen. If your child passes away, having life insurance will help cover funeral expenses.
This is also a useful idea if your child develops a pre-existing condition, such as diabetes or something that may lead to long-term disability. It also is good if they aspire to pursue a risky career, such as a pilot or someone in the military.
Similarly, if you have a child with a health condition or health issue that will likely make it difficult to insure them as adults,
it might be a good idea to invest in life insurance. They can help cover any bills related to a medical condition your child may suffer.
This way, you can lock in your child’s rates, give your family some financial protection, and make it easier for them to prepare for the future.
The Negatives
Life insurance agencies like to market child life insurance as a great investment vehicle. when evidence points to the contrary.
Even if you think that the life coverage is affordable enough, there is a good chance that you will run into financial hardships down the road. In order to have a comfortable retirement or other needs later on in life, this type of life insurance may not be necessary.
There are far better options on the market for saving money for college than life insurance. A college savings plan will be a smarter savings option. College-specific plans don’t typically come with as many fees as life insurance policies.
If parents are looking to buy a child life insurance policy for their child to protect their future insurability, that’s often unnecessary. Unless your child has a severe medical problem, it’s not going to be difficult to qualify for their own life insurance policy as an adult.
To
save money and invest wisely, add your children as “child riders” on your own life insurance policy. From there, you can put funds into a college savings account instead.
This way, you can cover two bases. Your finances can cover funeral costs if the worst should happen, and you’re setting your child up for a more dependable financial future.
Things to Consider
There are a lot of reasons to consider purchasing life insurance for your child. The options are limitless and it all depends on the situation that you’re in.
The first thing to consider is how much life insurance you can afford. Review your annual income, your current mortgage rates, and any other financial burdens you may have, and figure out if buying life insurance for your child is a feasible option for you as of now.
You should also consider the benefits and coverage offered in your child’s policy. In some cases, your child’s policy may be limited in terms of the amount of coverage or the number of claims allowed per year. If you have a child with a health condition, this might be something to consider.
You should also ask yourself if your child is likely to have financial issues, now or in the future, that would make buying life insurance now more dire for them than other ordinary cases.
This can include experiencing a serious illness or injury that would make them require extra financial assistance even past their point of becoming an adult. This is important because these policies may have a high price tag when they are no longer needed after they turn 18 years old.
Final Thoughts
Whether you’re preparing your child for educational expenses (such as college expenses or other school fees), saving some emergency fund for worst-case scenarios, or just trying to protect your child from financial hardships, life insurance might be a good idea. You can get quotes from various companies and find the coverage that best fits your needs.
However, buying life insurance for children is not something that should be done lightly. The coverage is expensive and not always necessary for every family. Some companies that offer life insurance for children include Gerber Life Insurance, Mutual of Omaha, and Globe Life Insurance.
Make sure that you take the time to look into it before buying any type of life insurance policy for your child. Consult with a financial advisor and a tax advisor if you have the time and budget.
Advisors will help you figure out the best option for your children. They will also guide you and your children through any necessary application process, as well as any application questions you may have, if you do decide to go forward with getting life insurance for your child.
