Do I need life insurance for my children?
The fact that you are even asking the question, “Does my child need life insurance?” is a great step in the right direction. When we think about purchasing a life insurance policy to protect our children, usually the idea of insuring ourselves is what we have in mind.
But there are many other ways you can protect your dependents with life insurance. Below we explore insuring your children and discuss why the decision to do so is a wise investment for some parents.
If you’re ready to talk to someone now about your options, a licensed insurance agent can help you compare your options and discuss your needs.
What is child life insurance?
Child life insurance policies are similar to those for adults except that they cover minors. They are intended to protect a parent or guardian from the unexpected cost of a funeral or burial.
Purchasing a life insurance policy while your children are young and healthy also guarantees the child’s lifelong insurability. Plus, a permanent life insurance policy could serve as a vehicle for cash accumulation for your child’s future.
5 reasons to consider life insurance for kids
1. Covering funeral expenses
At the most basic level, child life insurance is meant to compensate you for the financial expenses of a child passing away. While you may think that life insurance is only necessary for a person who provides household income, this notion completely overlooks the cost of laying a child to rest. The median cost for a funeral is about $7,848 with a viewing and burial. If the funeral has cremation, the cost is closer to $6,971.
2. Guaranteeing your child’s future insurability
Buying life insurance for children helps ensure that they will have life insurance in their adulthood. They do not have to worry about how contracting an illness or becoming sick can affect their ability to buy life insurance.
3. Locking in low premiums
The cost of insuring a young, healthy person is less than insuring an adult who may have an impactful illness. Locking in low premiums when your children are young and healthy can help them save on premiums over the decades.
4. Growing savings for the future
If you have elected to buy a whole life policy, the plan will include is a savings component called ‘cash value’. The cash value of the policy grows over time and can be borrowed against or paid out. Note that cashing out the cash value may end the policy.
5. Helping pay medical bills
Some child life insurance policies contain “accelerated benefits.” This means that if a person becomes terminally or chronically ill, they may be eligible to receive some or all of the financial benefits from their policy.
Can I buy life insurance if my child is already sick or disabled?
The extent of your child’s condition, or to what degree your child disabled, will determine whether he or she insurable. While you may find insurance for your child without any problems, the cost of the policy may be as expensive as a plan for an adult with serious health conditions.
How much life insurance do I need for my child?
The benefit amount you choose will depend on your goals for your child’s life insurance policy. If you are looking for basic coverage to shield you from the costs of burying a child, then a smaller amount of coverage may be appropriate. For example, adding a child rider to your life insurance policy or a final expense plan may be fitting.
If you are looking for a savings and growth component, then you may want to choose a higher benefit amount in a long-term universal or whole life plan. A licensed insurance agent can help you make a decision that fits your budget and your needs.
How to purchase life insurance for children
There are 2 ways that people can secure life insurance for their children.
1. Purchase a stand-alone policy
The first way is to purchase a stand-alone policy. The policy, or policies, will have individual premiums and benefit amounts. There are two types of permanent policies with cash accumulation to choose from.
- Whole life insurance is a permanent life insurance policy with guaranteed level premiums and coverage for the duration of the policy. There is also a component of cash value that can grow over time.
- Universal life insurance allows you to customize your coverage and premium amounts. This means you may modify the death benefit along the way to suit your current goals. Universal life insurance can also grow in cash value.
2. Purchase a child rider
The second way you can purchase life insurance for children is to add a “rider” on your own life insurance policy. A rider allows you to increase or add coverage to a policy for an increased premium cost.
Unlike a permanent stand-alone policy, riders cannot be carried into adulthood. Some policies may allow riders to be converted into a permanent life insurance policy for your child.
A licensed insurance agent can help you find the type and amount of insurance you need
Ready to purchase a plan but not sure where to start? A licensed insurance agent can help you understand the complexities of policies available to you and help you select the right insurance solution for your budget and specific family needs.
Call today at (800) 827-9990 to learn more about your life insurance options, or to find an agent in your area.