The Corona 19 pandemic has left many people anxious about the need for life insurance. According to a recent survey by Life Happse, an industry-funded nonprofit that provides insurance information, it was one of the most important topics at the dinner table. And a quarter of those surveyed said they took out life insurance because of the Crown.
Life insurance can provide solid protection for loved ones who depend on you economically. But Faisa Stafford, CEO and president of Life Happenings, says the pandemic prompted her to take out life insurance for her teenage daughters. Of course, her daughters are now people who rely on Stafford for support. So why do I need insurance?
What is life insurance for children?
Child life insurance is a system of protection in the event of your child’s death, primarily underwritten by a parent or guardian. These policies are usually term policies and last until the child becomes an adult, but you can also purchase a permanent policy that allows your child to receive life insurance at a lower rate because of his or her young age. Please note that life insurance for children is different than life insurance for child riders.
Who should consider taking out life insurance for children?
Parents, grandparents and legal guardians want the best for your child. For some people, that means signing up for children’s life insurance to provide financial protection if something unimaginable happens to their children or grandchildren. Other reasons to consider purchasing a child life insurance policy based on your individual circumstances and needs include:
- Your child’s future insurance is important to you. Most children’s insurance is a form of life insurance that is guaranteed for life as long as premiums are paid regularly. When your child reaches a certain age, you can purchase additional insurance regardless of your current health or occupation.
- You want to lock in lower premiums. Generally, the younger the insured, the cheaper the premium. The insurance company will set these low rates for the insured at the time of enrollment and will not increase the premium over time.
- You’re saving for the future. Life insurance includes an element of savings called cash value. This cash value increases over time, usually at a fixed rate, and can be borrowed or paid back if the policy is surrendered. Some insurance companies promote these policies as a way to save for their children’s college education, while others caution against it. Talk to a certified financial architect about saving for your child’s future.
Before I bought it.
Before you take out insurance for your children, evaluate your budget and look at your life insurance needs. In general, your life insurance is more important than your child’s because it can cover your family’s living expenses or other expenses in the event of death.
Instead of signing up for children’s insurance separately, you might consider adding a life insurance participant for up to one year to your own coverage. In some cases, after that period, the child living in the home may be switched to permanent insurance. Not all insurers offer these services, and coverage may be limited.
Alternatively, if you sign up for group life insurance as part of your employment, you have the option of signing up for life insurance for your child or spouse. However, group life plans are usually tied to your employment, which means that if you quit your job, you could lose your coverage.
Getting life insurance for your children is a personal decision.
Even though I have changed my stance on life insurance for my children, my two sons are still uninsured. My father’s superstition about temptations to fate remains with me. And my husband and I are lucky enough to be in a financial situation where we can afford monetary expenses if something terrible happens. My only big concern is that one of my children might have a diagnosis that would prevent them from getting insurance in the future. But we decided to take that risk and live with it.
It is important for all parents to think about all the consequences of signing up for or not signing up for life insurance for their children. It’s a continuation of painful thinking, but it’s necessary. Regardless of what you choose, a well thought out decision will lead you to what is best for your family.
Child Insurance Costs.
According to Hoang, the younger the child, the cheaper the insurance premiums can be. When you sign up for whole life insurance, the low rate set at the time of purchase is covered for the life of the policy.
The amount you pay also depends on the amount of insurance you purchase. And you may be affected by the type of payment schedule you choose. For example, according to Hoang, you may have the option to purchase a policy that can be paid off by age 65 or 100. The longer the payment schedule, the lower the premium.
On the other hand, an insurer may offer the option to pay off the policy in a specific year rather than the life of the child. For example, American Family Insurance offers 10-year and 20-year payout options for your child’s whole life insurance. The shorter the payout period, the higher the premiums, but if you want to pass on premiums that have already been paid to your child, it’s worth considering this option.
As Hoang’s sample rates below show, full life insurance premiums for children are much lower than for adults. The sample rates are taken from AAA-rated life insurance companies.
When can I take out life insurance for children?
Children are generally eligible for coverage on the 14th or 15th day of life. When this threshold is reached, you can purchase insurance at any time until your child or grandchild reaches adolescence. The deadline depends on the insurer. For example, age 14 is the upper limit for the Gerber life insurance growth plan, while Mutual in Omaha sets a 17-year limit for purchasing life insurance for a child. If you add child life insurance to your policy, the age limit may be increased to 25, depending on the company.