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Life Insurance for Children

By Byron Udell | August 24, 2006

Does your child need life insurance? The answer may surprise you.

For many of you out there, life insurance for children may be an unthinkable option.

My children aren’t earning, why should they be covered under life insurance?

Insuring your new born child? Isn’t that like the guy who got arrested for murdering his new born girls for a quick payday?”

Insuring kids is a waste. Put your hard earned money in something else!

And yet, tens of thousands of families across the country choose to buy some form of child life insurance to supplement their family insurance portfolios. There are some clear and obvious reasons (that some may not know) why a life policy on children is deemed a wise investment and even a necessity for some families, despite the negative connotations it carries.

The video below gives a brief overview of the benefits of child whole life insurance:

Here are some quick tips to read through that will help you with finding child life insurance:

  1. For those families that have a history of health conditions that run in the family, this is reason enough to try and seek life insurance protection on your child. While questionnaires usually require applicants to answer questions on the health of their immediate family members, genetic testing for hereditary disease is not being done by life insurance companies yet. If you suspect that your child could have trouble finding life insurance later on as an adult because of a possible condition that would render him uninsurable, having life insurance as a child can help safeguard against that possibility. How? Since all individual life policies on children are whole life policies, they last for as long as your child is alive, and don’t run out like term life insurance. They can be increased in face value once your child turns 19 to pay out a larger death benefit, that too without a medical examination.
  2. However, for many families, having life insurance for the above reason may not be necessary, but it doesn’t cancel out the need for a back-up plan for expensive funeral bills. Many stories surface every year of families who have spent months after the death of a child in fundraising activities to pay for funeral bills instead of grieving and coming to terms with their loss. Funerals are not “affordable” any more. Worse, if you’re dealing with a large hospital bill, this could quickly eat into your savings, making the loss not just an emotional one but also a financial disaster, all for a child who “was not an earner”. A low cost funeral is at least $10,000. Do you have this amount stowed away for a funeral emergency? An affordable, convenient option for those that are not sold on the whole life insurance concept is to get a child rider on your own term life insurance policies. Child riders are cheap, costing as little as a couple dollars every month to cover a small death benefit that can easily pay off funeral bills. Some policies allow these riders to be converted into whole life policies at the age 19 without medical examination, hedging against future uninsurability.
  3. Whole life insurance on children can also help save for expenses like college tuition. We recommend this to families in upper income brackets that are looking for a forced savings vehicle that don’t mind a slower rate of growth in a safer account. When you buy whole life policies for children, make sure to think of them as permanent death benefits first, and as investments later. You can borrow from this policy and pay it back at internal interest rates, but it would subtract the death benefit in the policy. Parents and grandparents also like gifting the policies when the child comes of age, by which time the policy would be paid up if left untouched for its entire duration. You can choose to gift your policy to your child at 19 years of age, but they cannot expect or demand for the money. Since you paid into it for all those years and you are the owner, you get to hold on to it if you think it necessary.
  4. An important thing to remember is that parents need to be covered under adequate life insurance policies themselves in order to get any life insurance for their children. You shouldn’t be thinking about policies for a child if you don’t have one to protect your family if something happened to you.

For more help and information, look up child life insurance quotes online or talk to us about which option is a better fit for you. With the help of a life insurance needs analysis, you will be able to find out if life insurance on your children would be needed to complete your family’s financial plan.

We only work with highly rated insurance companies – brand names you trust. You may be able to save money without sacrificing quality and strength.