Not many people think of children and life insurance together, but buying life insurance for a child is actually very common. There are a number of advantages to getting an insurance policy on your child or grandchild’s life. Life insurance can give a child a head start on saving while providing insurance coverage at the same time. Children’s life insurance policies have an extremely low cost of insurance, so policies for children are very affordable for everyone. Children do not require much underwriting, and in some cases, they do not require any underwriting at all. This makes the process of actually buying a policy very simple. It also means that your child will be guaranteed insurance protection in their life, no matter what their health situation is later on in life.
Children’s Life Insurance Is Very Inexpensive
Life insurance companies base their prices on life expectancy. The longer the life expectancy for a group of people who are similar, the less expensive the insurance is for them. Because children are expected to have the longest lives ahead of them of all people, the cost for a life insurance policy is least expensive for children. Insurance policies can even be purchased for newborns. This type of policy does not require any medical underwriting, because all newborn children are considered to be in perfect health.
Whole life insurance for children also has a level cost, and usually, dividends will be capable of paying the entire premium amount by the time the child has reached the age of an adult. This means that when they take ownership, the policy is saving money to itself, growing every year, and they may never need to make a payment! As an investment, a whole life insurance policy is an easy way to set your child on the right financial track.
Some parents choose to purchase a term life insurance policy on a child’s life, usually to defray the risk that the child passes away after significant investment has already been made in medical care, education, daycare, etc. A term life insurance policy for a child will be very inexpensive, even for a large face value, because most children will be assumed to outlive the length of the term coverage.
Benefits of Children’s Insurance
Children’s insurance benefits both parents and children. Children benefit from a whole life policy that will accrue cash value for them over time. When you purchase a child a life insurance policy, you are giving them an investment for their whole life. Dividend payments should grow over time, and eventually, the policy will be able to pay for itself through dividend payments alone. This means that by the time your child inherits ownership of the policy, they may never need to make a payment. After taking ownership they can transfer beneficiaries from the parents to their own spouses and children when the time comes, and it becomes an investment and source of protection for their families.
By purchasing insurance when a child is young and healthy, you guarantee that they will be able to be covered by life insurance for the rest of their lives. Even if they suffer a serious medical issue and would be unable to obtain another policy, they will still have the insurance coverage they locked in at childhood. Policies often have riders which allow the owner to purchase additional coverage at various points as the child ages, without any underwriting. By purchasing life insurance for a child, you are guaranteeing their insurability.
Parents protect themselves from the financial investment of raising a child when they buy children’s insurance. Today more parents have costly medical bills, including fertility treatment. While losing a child may be devastating, parents may eventually want to conceive another child, but without life insurance, they would be unable to afford the process again. Insurance also protects parents from the investment they may make in education, child-rearing, doctor visits, home improvements, and the opportunity cost of career sacrifices.
Children’s Insurance Rider
An even less expensive way to obtain insurance coverage for a child is through a children’s insurance rider on a parent’s policy. When a parent gets a new policy, whether whole life, variable universal, universal, or term life coverage, there is an option to have an accompanying term insurance rider covering a child. This allows a parent, with no underwriting, lower costs, and with only have one policy to keep track of, to insure their child’s life. This term insurance rider is also convertible to a whole life policy later in the child’s life if they wish to keep the coverage.
How To Buy A Policy On A Child’s Life
Insurance on a child can be purchased the same way as an adult’s policy. This can be done either through an agent or online in some instances. To compare prices for children’s insurance and for a policy with a child insurance rider, please enter your zip code in our quote tool to get started.