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Why Buy Life Insurance For Your Children
Article 4 of 12 in Is Life Insurance Right For Me?
Life insurance is an important part of any family's financial planning, and can have additional uses beyond end of life planning. A life insurance policy can act as a financial management or savings tool for any member of your family, even the kids. Life insurance for the children in the family can be a very important part of any family's life insurance plan.
Child Life Insurance
Life insurance for children is a debatable subject. Of course, the main purpose of any life insurance policy is to provide a death benefit to beneficiaries, and no one intends on planning for the end of their child's life. However, if something should happen to the child, there would be enough money to cover funeral expenses and possibly pay any medical bills that could have been associated with the death. With the rising cost of medical care, a life insurance policy will be beneficial should the unthinkable happen. Locking in an affordable life insurance policy for the child while he or she is young could provide a solid means of life insurance in later years if the child should become disabled or develop a health condition making him or her uninsurable.
Additional Benefits of Life Insurance for Children
More than a death benefit, life insurance can also have additional financial benefits. Depending on the type of life insurance you purchase, your life insurance for the child will accrue a cash value fund that your child can borrow against during hard times or provide a down payment for a home. An affordable permanent life policy for $50,000 in coverage can be purchased for as little as $10 a month ($120 a year) and will give your young person a policy as long as they live for the same $10 a month. When your child retires, say age 60, he or she will have a policy in place to leave their family protected as long as they continue paying the $10 monthly premiums.
TIP: Locking in on insurance while the child is young could provide a solid means of life insurance in later years if the child becomes disabled or develops a health condition and therefore is uninsurable.
Things to Consider
Of course, if investment is your primary goal, there are plenty of financial proponents that will argue that you can achieve much better investment result with other types of investments. They are right! These investments could give much better return, and arguably gain much greater value than $50,000 over 60 years. With the better investment portfolio, your then senior citizen child could self insure themselves at death.
Investment does not have to be the primary goal, however, because you cannot argue that it still never hurts to include that extra benefit of life insurance in case of death. For a very minimal insurance premium payment, life insurance for a child can be the corner stone and building block to a solid financial future and provide assistance in the event of a tragedy.
TIP: You need to analyze your finances and see if you can afford to dedicate a portion of your budget to insuring your child's life. Life insurance for children is not a reasonable option for all families, so know what your needs are and ask an insurance agent any questions that you have.
Types of Life Insurance for Children
There are several types of insurance policies you can use to insure your child.
- Term insurance is for a specific term or specific time. If your child is one years of age and you purchase a 30 year term, they will be out of insurance at the age of 31.
- A child rider to your existing policy is always an option. You can purchase a child rider and add it to any life insurance policy that you may have. This rider will be there until the child is eighteen. Usually providing nominal amounts of coverage, sometimes up to $20,000, this can be an effective way of having straight insurance coverage. This is only a rider however. It is not a separate policy. Your child can not take it into adult hood and when the child gets to eighteen, the rider no longer provides coverage. This can be purchase for a few dollars a month and is a great option for anyone that is working with a type budget.
- Whole life or cash value insurance is a great option for a young child. It offers coverage for life! As long as you or the adult child pays the premiums, your child will have coverage until death. You can add a paid up addition rider for a few more dollars which will essentially pay up the policy quicker. Meaning it is possible that when the child is 30, they will not have to make another payment as the policy would be completely funded.
TIP: Talk to a life insurance agent and ask them for a quote on a life insurance policy for your child. If you choose to get a whole life cash value policy, ask the agent for a life illustration. This will allow you to see how fast the policy will gain cash value.
There are many companies out there that say they provide life insurance for a child or a whole life policy for very little premium. Make sure you choose a reputable insurance company. Choose a company that will be around 30 years from now so you can collect any cash value and one that will stand by paying the death benefit. Check out any insurance company's rating at the Free Advice review center, and stick with companies that are rated A or AA+. When you are ready to shop and compare quotes, use our online quoting center at Freeadvice.com to get an affordable child life insurance quote today!
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