Should You Buy Life Insurance For Your Child?
Did you know that you can buy life insurance for your child from the day they’re born? There are, of course, other expenses that should come first (your own life insurance and/or retirement fund, a college savings account, etc.). As long as you have other savings accounts already opened and active and you have at least $5/month to spare, you can purchase life insurance for your young child.
How Does It Work?
You, the parent, will be considered the life insurance policyholder for your child until he reaches age 18 and you pass over the rights. Typically, your child’s coverage will be an addition to your existing life insurance policy. It will add a few dollars to your monthly premium. Almost every major life insurance carrier offers child life insurance.
What Are The Benefits?
To tap into the most unfortunate benefit first, a child life insurance policy will help you in the event that your child suffers from an untimely death. If such an event occurs, you’ll be too focused on your child to be worrying about paying medical bills, lost income, funeral expenses, and counseling services. A child life insurance policy will relieve you of those debts. Still, those circumstances can be covered with a regular savings account. So why buy life insurance for your child?
It also protects your child against being denied insurance later in life. If he develops a medical condition later in life, he’ll already have life insurance and won’t have to worry about insurers denying him for pre-existing conditions. Most 20-30 somethings have no trouble buying life insurance, but the older you get the more likely you are to face denial.
What Types Of Plans Are Available?
There are a few options. You can purchase coverage for your child through you or your spouse’s term life policy. You’ll purchase your own plan first, then your “rider,” which adds a relatively small amount of coverage for your other family members. The coverage is typically about $20,000 and lasts for a selected period (such as 10 or 20 years). If the insured person dies during the term, you will receive the “death benefit.” The other option is to purchase a whole life policy for a face amount (usually about $50,000). It will last for the duration of the child’s life and works like a savings account that builds value over time. The premiums for whole life coverage are higher, but so is the amount of coverage.
It is reasonable for you to purchase life insurance if you have the proper funds to pay for everything else FIRST, and still have money leftover. It’s a smart decision if you already have surplus income. If you don’t, take care of your own insurance first, because you can always use that to help raise your savings, which will trickle down to help your child if he gets sick.
If you do decide to purchase life insurance for your child, or if you’re hoping to purchase or change your life insurance policy, speak to one of our licensed agents at InsureTN. Call 615-964-5250 today.