Children and infants are a common debate in the life insurance industry: Does a baby need life insurance? Is it worth it? The one choice most can agree on is to be sure other critical financial obligations have been met such as a savings account, life insurance policies for the parents, and the juvenile’s higher education fund. After these primary obligations, the parents should consider additional financial security for their children.
CAN YOU BUY LIFE INSURANCE FOR A CHILD?
Yes. Child coverage is mostly available through a whole life or juvenile life insurance policy. These policies typically have less coverage ranging from $1,000 to $25,000 and can be active from the child’s birth date through death date.
A child rider option may be available through your or your spouse’s life insurance policy depending on your insurance provider. A “rider” means the child is added to the parent’s policy at an additional cost and gets his or her own benefit, usually a lower amount. Age requirements for child riders vary with every company, so be sure to check for it if you’re considering adding your child.
JUVENILE LIFE INSURANCE ADVANTAGES
Benefit amounts and buying processes vary from company to company, but buying life insurance for a child can be very valuable.
FINAL EXPENSE COVERAGE
Should something happen, a final expense payout can help cover a child’s funeral, possibly fund family grief counseling, and help supplement income for the parents’ time away from work.
CHILDREN ARE EASILY INSURABLE
Adults who buy life insurance have to consider their health, health history, family health history, and lifestyle habits. However, most newborns and children are the youngest and healthiest they’ll ever be in their life, therefore they are typically easier to insure.
POLICIES CAN BE CHEAP
Not only do children tend to have an easier time qualifying for life insurance, they can also have the lowest premiums rates on the market. Most companies lock in a child’s premium rate, meaning the child would not be subject to rate increases that correspond with age and health over time. For the same amount of coverage, the premium for a child will generally be less than the cost if they waited and purchased the coverage later in life.
CASH VALUE BENEFIT
Some life insurance policies have a cash value benefit. Later on, a policy loan could be used to help pay for college or a wedding. A loan policy comes with great consideration, so be sure to inform your child of the impacts beforehand.
JUVENILE LIFE INSURANCE DISADVANTAGES
As with anything, there are skeptics who are against juvenile life insurance policies for a few reasons.
LOW CHILD MORTALITY RATES
According to the CDC, approximately 12,000 children and young adults, ages 1 to 19 years, die from unintentional injuries each year. While most skeptics would use this to prove child death is unlikely, this number only includes unintentional injuries, not cancer and other critical illnesses.
HEALTHY ADULTS ARE INSURABLE
A juvenile life insurance policy is appealing because you could potentially lock in the rate while your child is young. Those against juvenile life insurance argue most adults in their 20s to 30s are insurable and can still qualify for relatively inexpensive premiums.
COLLEGE SAVINGS ACCOUNT
Cash value is appealing to parents because it acts almost as an asset fund should they need it. However, financial advisors who beg to differ believe there are better ways to save for those expenses such as savings and investments accounts.
While securing financial coverage for their children is a priority for some parents, it may not be to others. There is no “one size fits all” when it comes to insurance. Any life insurance purchase comes with heavy consideration and those looking to buy should be well informed about their purchase.
Categories: Life Insurance, Term Life Insurance, Whole Life Insurance