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Why Buy Life Insurance For A Child

Like a life insurance policy for an adult, a life insurance policy for a child is a contract with an insurance company. Premiums are paid (typically monthly or annually) in return for the promise that the insurance company will pay a death benefit if the child dies.

why buy life insurance for a child

The younger your child is when you buy a policy, the cheaper it will be, Hoang says. With a whole life policy, the low rate you lock in at the time of purchase will be guaranteed for the life of the policy.

As you can see from the sample rates provided by Hoang below, premiums for a whole life policy are significantly lower for a child than an adult. The sample rates are from an AAA-rated life insurance company. Rates shown are for a male.

It provides funds for funeral expenses. The chances of a child dying are low, so funeral costs are not a good reason to buy life insurance on a child. But if that happens, a life insurance policy will provide funds to help cover the cost of final expenses. It also could allow the family to afford to take time off from work to mourn the loss of a child.

You might be able to use the cash value to cover premium payments for a while if the policy has built up enough cash value. But then there will be less cash value for your child if he or she needs it later in life.

Before buying life insurance for a child, make sure you have enough coverage for yourself. Protecting the financial well-being of loved ones takes priority. In fact, insurers usually require that parents have their own life insurance policies with at least as much coverage as they want to buy for a child as a prerequisite for insuring a child, Hoang says.

Life insurance can provide a safety net for loved ones who depend on you financially. But Life Happens CEO and President Faisa Stafford says she was prompted by the pandemic to buy life insurance policies for her two teen daughters. Of course, her daughters are the ones who depend on Stafford for support now. So why would they need insurance policies?

Working with a financial planner can help you decide whether life insurance for your kids is a good fit for your family and your overall financial situation. Also consider working with an independent insurance broker who works with several insurance companies and can help you find the best policy at the best rate.

Most insurers will transfer ownership of a whole life policy automatically from a parent, grandparent, or guardian, to the insured child once they turn 18 or 21. Some may allow you to transfer ownership at the time of your choosing. In either case, premiums must continue to be paid on time in order to guarantee coverage continues.

The cash value earned from a permanent* life policy (such as whole life, universal and variable life) can be withdrawn or borrowed against**, providing living benefits that can be used by your child as he or she gets older for many things such as:

There are a number of factors that can affect your child's future insurability. High blood pressure, diabetes, obesity and cancer are just a few of the many health complications that might prevent your child from being insured down the road. One of the primary benefits of purchasing a permanent life insurance policy when they are young is that they will always be covered regardless of their future health as long as required premiums are being paid.

Some life insurance policies for children come with an optional guaranteed insurability rider/endorsement that may be available for an additional cost. As your child grows into an adult, this rider allows them to buy additional life insurance above the face value of the current policy (on specific dates and in certain increments) regardless of his/her health status at the time. Usually, the older the child gets, the fewer dates the policy owner has to purchase more life insurance under the rider. In some instances, after a certain age, the rider may not be exercised.

Life insurance premiums for minors can be very cost effective. Buying life insurance for your child now could give you an opportunity to lock in that rate for the life of the policy. As long as the required premium is paid, the policy will stay in force.

Policies vary greatly from company to company. A life insurance professional can help you select the right policy type and optional policy riders so your child will get the most out of their policy - even when he or she is grown with a family of their own.

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Life insurance for children is usually purchased by a parent or guardian as a safety net in case your child passes away. These policies are typically term-based, lasting until around the age the child becomes an adult, but it's also possible to purchase a permanent policy, which would allow the child to access coverage for their entire life at a locked-in lower rate due to their young age. Note that life insurance for children is distinct from a child rider.

Life insurance for children is typically a term life insurance policy purchased by a parent or guardian as a safety net in case your child passes away while they're a minor. If you keep the policy active, it can pay a death benefit to its beneficiaries, typically the child's parent or guardian, upon the child's passing.

The minimum age for life insurance ranges from 0-14 days, meaning you can take out life insurance for your baby, child, or teen. No medical exam is needed to qualify for coverage, so you can easily enroll them whenever the timing is best, but enrolling them at a younger age may result in a lower premium.

Getting life insurance for your child can be worth it if you want to make sure there's a safety net for your family in case your child passes away. There are some other benefits to getting life insurance for a child, such as potentially lower life insurance rates once they're an adult. Talk with a financial advisor to understand the implications of purchasing life insurance for your child while they're a minor.

While many parents choose a term policy for their child's life insurance, you might decide to get permanent life insurance (like a whole life policy) if you want to make sure your child and their future family have coverage into adulthood. If you think your child will want life insurance coverage as an adult, getting a whole life policy for them when they're a child can help lock in a lower fixed-rate premium, since life insurance rates generally increase as you age. A whole life policy will accumulate cash value, and it can help provide a financial safety net for future generations, since the beneficiaries could eventually be changed to your child's spouse and children.

That said, permanent life insurance policies are considerably more expensive than term policies. It may make more sense to purchase a term policy for your child when they're young. When they reach adulthood, they may be able to convert it to a permanent policy themselves if they want to keep it. That way, the higher premium will only apply once the policy is converted.

Life insurance for children is distinct from a child insurance rider, which is an extension of your or your partner's life insurance policy that allows for a small death benefit if your child dies. A child rider can be more affordable, and it can often be converted into a separate policy for your child once they're an adult.

Please note: The above is meant as general information to help you understand the different aspects of insurance. Read our editorial standards for Answers content. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page. 041b061a72


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