Fact CheckedAre you looking for the best life insurance for children? Well, good for you!
I know many people think this may sound CRAZY, but I think it’s a great purchase!
…and NOT because I’m a life insurance agent looking to expand my market. I can say that with complete confidence.
Life is not as simple as we would like it to be. It has its own direction and sometimes doesn’t fit our plans. Sadly, critical illness often strikes when we least expect it.
So, let’s say you give birth to a perfectly healthy, happy baby, and life is good. The thing is, health concerns may be revealed as time moves forward.
This is one of the best reasons to consider life insurance for children, and I will show you why right now.
Life Insurance for Children
How It Can Help You & Your Family
Many people see ads for life insurance for children and think it’s truly morbid. I get that completely; if I’m 100% candid, I had some of those thoughts myself. After all, life insurance is a business, and I would be insincere to say otherwise.
But there is always the yin with the yang.
Life insurance is a terrific safety net, and children are no different. It can help you and your family avoid sticky financial situations in several ways. So, let’s take a deeper look into this right now.
1. Life Insurance for Children Can Prevent a Financial Tailspin If a Death Occurs
Well, this is the part of the article that NO ONE wants to talk about, and I don’t blame them. We aren’t supposed to outlive our kids, and those parents who go through this sort of tragedy are in my thoughts.
I can’t imagine how difficult it would be to experience this sort of loss as a parent and overcome it. Many families are so damaged they fall apart emotionally and financially.
The worst part? Funeral expenses are steep. So imagine you sustain medical bills and unimaginable mental distress, and now you have to pay thousands for burying your child. Life insurance protects you from this.
It’s also incredibly affordable, so you don’t have to shell out tons of money for this protection. The monthly premium you pay is based on risk. A young, healthy baby isn’t likely to die, so the cost to you is minimal.
2. Life Insurance for Children Can Prevent Loss of Income
If you lose a child, it will impact your income. You don’t recover in days or even weeks. I’ve heard stories about parents who have lost children taking off six months – only to return part-time.
This is a very charged subject, but it needs to be addressed. Taking out life insurance for your children makes financial sense.
It’s not a choice anyone wants to make, but without insurance, you’ll be back at work before you’re ready.
The death benefit you receive replaces your income while you spend the kind of time you need to grieve and take care of your family.
“So with this out of the way – I can get into the meat of why I particularly love life insurance for children.”
3. The Best Life Insurance for Children Guarantees Future Insurability
The cost is one of the biggest perks of buying life insurance when young and healthy. Sadly, more people than not come to me for coverage when they are worried about their health.
Yes, unfortunately, this is true.
When an accident or medical issue is diagnosed, the person is suddenly forced to consider the impermanence of their life.
As the veil of denial is lifted, people start planning for their inevitable departure, leading to a call to an independent life insurance agent.
The problem? Now their rates are sky-high—or worse yet, they are not eligible for a traditionally underwritten policy, which means guaranteed issue is their only option—if they can afford it.
Life insurance companies want to make money. This means the unhealthier you are, the bigger risk the insurer takes on! This translates into expensive premiums.
That’s why life insurance for children rocks. Protecting your little one has never been easier.
4. Preparing for the Future!
There is no guarantee you or anyone else will be eligible for insurance down the line.
If you want an underwritten policy, you have to go through all the hoops to get it. The drill is that you answer a battery of questions, get a physical, and then an underwriter reviews the results, your answers, and your medical files before issuing a rating.
This rating determines how much you pay for life insurance.
The good news is that most people are healthier than they think. That said, the healthier you are when you apply, the cheaper the rates.
This is where life insurance for children pays off. A baby is about as young and healthy as it gets. You can get a terrific term or permanent life insurance policy for very little money.
But that’s not all!
5. A Gift of Life Insurance for Your Children
Some people like to make a gift of insurance for their children, paid up when they’re adults. This is probably a much better investment than buying a car.
A Guaranteed 20-pay whole-life policy is a good idea for a situation like this.
You make payments for 20 years, and the insurance is paid up.
For example, if you take the policy out when your child is 2, they benefit by age 22. However, this doesn’t mean handing over the policy when your kid is 22 is a good idea.
I’d strongly advise against it unless you want to see your son or daughter cash out the policy to buy a car or go traveling.
Nevertheless, over time, there may be some decent growth in the policy’s cash value, for example, when it is 35 years old.
Universal life is another option. It’s a permanent policy, but it’s less expensive because it typically does not have a cash value accumulation feature.
Always Make Sure You Have a Guaranteed Insurability Rider
I highly recommend that you ensure the policy has a guaranteed insurability rider and a conversion option (if you opt for a child rider on your policy).
Your child will still be eligible to buy more life insurance at an affordable rate…without providing further evidence of insurability.
So if you’re like our family and something comes up later in your child’s life, they can still purchase comprehensive coverage inexpensively.
This feature is truly worth its weight in gold. It may not seem important now, but it can offer invaluable options later.
The Best Life Insurance for Children: Permanent vs. Term
You can choose between permanent and term life insurance for children. For most people, permanent insurance is the obvious choice. It has a guaranteed payout, which means it gives your kid some cash at the end of the policy.
This is terrific for those of you who would like to provide access to funds for college, a new home, or just because.
Permanent policies also have a cash value accumulation feature that can be borrowed against. This is useful if you need access to funds before the end of the policy term.
Permanent insurance is much more costly, especially for adults. However, a whole-life policy can be very affordable for children.
A Child Rider
Term is always an option when buying a life insurance policy for your child. Larger coverage amounts are available….
….BUT your child will likely outlive this protection.
This is the goal for anyone buying life insurance, but it’s not always optimal based on financial needs.
I am happy to report that you can convert your term coverage into a permanent policy anytime!
This means you don’t have to provide the life insurance company with proof of insurability when you exchange the term for permanent coverage. This is terrific news for those who have newly acquired medical issues.
At the very least, you can add a small rider to your adult policy. It’s called a children’s protection rider and provides a small amount of protection (up to $30,000), covers all current & future children, and is very inexpensive (approximately $9 more per month extra).
It offers some future guaranteed insurability by allowing your children to convert to their life insurance coverage when they become adults. Remember, you have to select an eligible plan.
Financial Planning is Imperative
You can do a few things for your family that are more important than financial planning. You’d be shocked if you knew how many people I met that don’t even have a will.
What will happen to their children if they pass away? Where do the funds go? Ugh, and chances are they have no idea how much it will cost their estate for someone to figure all of this out in probate. A little planning can go a long way when it comes to taking care of those you love.
Life insurance for children is just another aspect of this planning. No one can predict the future, but you can get ahead by thinking.
I wish I had known about life insurance for children BEFORE my son was diagnosed with ADHD. Then, we could have purchased him a childhood policy, and he would have access to affordable coverage for the rest of his life and maybe some extra funds for college or university at the end of the term.
This is Why You Should Call Policy Architects Today
If you are looking for the best life insurance for children or final expense insurance, Policy Architects can help at any stage.
I meet with people from all walks of life daily, from the elderly looking for small final expense policies to newborns looking for life insurance.
…we’ve got you covered.
I’m never going to tell anyone that a life insurance payout makes tragedy all better – but it sure does help take the heat off when things are going to hell in a handbasket.
Call us today, and we will find you the best coverage at affordable rates.
