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What is Child Term Life Insurance?
Child term life insurance is a way to ensure that your children will always have coverage available to them no matter what ailments they might develop later in life. To some, it’s a great, low-cost way to set money aside for the future and to make sure the child will have insurance as an adult (if an illness later in life makes him or her uninsurable). Others say it’s an outdated product that has been replaced by more effective savings tools, such as 529 plans. According to some research from the American Council of Life Insurers (ACLI), life insurance for children isn’t a popular purchase. The ACLI reports that only about 15 percent of people under the age of 18 have life insurance. The average amount of coverage on children is small, somewhere in the range of $5,000. Many companies will add on a small amount of insurance to the parent’s policy, essentially to cover funeral expenses. The death of a child isn’t something parents want to think about.
But life insurance isn’t necessarily all about death. Child life insurance is about preparing for the future. And as parents and/or grandparents, one primary concern is making the future better for our children.
How Does Child Life Insurance Help a Child? Right now, when a child is young, strong, and healthy, life insurance is obtainable at a minimum cost. But if a child develops a problem like a chronic disease, life insurance can be almost impossible to obtain. Signing up for a low premium term life insurance policy now, with a guaranteed periodic purchase option, will make it possible for them to have life insurance as adults despite developing an ailment later in life. Another possibility for them is to purchase a whole life insurance policy, which will last for the rest of their lives. Their age and health status won’t make any difference, nor will it matter if they serve in the military or have dangerous occupational hazards.
Such child life insurance is ideal for planning for the future because of the cash value the plan would accumulate. As an adult, they could borrow against this value or stop the policy and withdraw the money (to pay for college or any number of things).
Who Can Purchase a Child Life Insurance Policy? Parents, grandparents, and legal guardians can all purchase child life insurance policies. New parents often have heavy financial burdens during the first few years of a child’s life, and buying insurance is difficult. So grandparents (who might be more financially stable) purchase insurance for their grandchildren.
When Does Coverage Start for a Child Life Insurance Policy? When you start a life insurance policy for a child, the coverage begins immediately. There are no necessary medical exams to go through, just a few health related questions on the application is generally enough to get a child qualified. The rates for child life insurance vary just like any other insurance. Whole life rates stay the same. Term life rates depend on the policy, how old the child is, and several other factors. Policy renewal agreements can vary also, so make sure it’s spelled out before signing up for term policies. Some times you can purchase a term policy and then switch it to whole life at the end of the policy’s period. Child life insurance policies can last as long as you wish to sign for. Again, whole life policies for children don’t ever end, while term policies are defined before you purchase it.
Who Receives the Benefits? In child life insurance policies, the parents or legal guardians are the beneficiaries. But the one who benefits the most is the child. He or she benefits from the security of a life insurance policy that will continue even if he or she is diagnosed with a life threatening disease. Secure your children’s future now with child life insurance. It’s good for them, it’s good for you!