While life insurance is commonly associated with adults, offering reassurance for those financially supporting dependents, child life insurance extends coverage to minors. While it may seem unnecessary or somewhat solemn, this insurance offers several benefits, such as financial planning and securing future insurability for your child.
Keep reading to explore the intricacies of child life insurance, grasp its significance, and discern key considerations when deciding on this option.
What Is Child Life Insurance?
Child life insurance is typically a permanent policy otherwise known as Whole Life Insurance and is designed to serve multiple purposes. Its primary function is to offer a death benefit in the tragic event of a child’s passing. While contemplating such a scenario is undoubtedly difficult for any parent, having this coverage ensures financial support for your family during an emotionally challenging time.
Another common reason parents and even grandparents opt for coverage for their child is to build cash value over time. This cash value serves not only as a monetary asset, but also as a tool for supporting their future financial needs.
Who Gains from Child Life Insurance?
Child life insurance serves multiple crucial purposes, encompassing guaranteeing your child’s future insurability, creating a fund for major expenses through the cash value, and providing a death benefit if needed.
Ensuring Future Insurability
Securing your child’s future insurability is paramount. The unpredictable nature of potential health conditions as they age makes this aspect particularly vital. Obtaining insurance now ensures they can maintain a permanent policy throughout their life, regardless of any health issues that may arise later on.
Buying Life Insurance For Children Locks In a Low Rate
Moreover, life insurance premiums are generally more affordable the younger and healthier you are compared to attempting to acquire similar coverage as an adult. By obtaining lifelong coverage for your child early, as long as premiums are paid, premiums tend to be guaranteed and won’t increase over time. Of course, you or your child will be paying premiums over a longer period of time. However, the amount paid over time still can be lower because of the significantly lower rates for a child.
Building Cash Value
This insurance functions as an investment, providing your child with a solid financial foundation. The accumulated cash value in the policy can be utilized to fund significant life milestones such as purchasing their first car, covering college expenses, or contributing to a house down payment. Parents also like the tax-advantaged growth on the cash value portion of the policy.
Death Benefit
In the unfortunate event of a tragedy while the child is still young, the life insurance death benefit steps in to offer financial support for necessities like funeral expenses and medical bills, or to allow the family to afford to take time off from work to mourn the loss of a child.
However, if you’re primarily interested in child life insurance to cover funeral costs, you likely can add a rider to your own life insurance policy to cover your child for less than what you’d pay for a whole life insurance policy on the child.
Getting an Insurance Policy for Your Child
Purchasing a policy is relatively straightforward. At Acentria Insurance, we are here to explore the best life insurance options for you and your child. Generally, healthy children can be covered with ease, involving a questionnaire and a medical record check. In most cases, there’s no requirement for a physical examination if the child is born healthy. However, if a child is born prematurely or with health concerns, there might be a waiting period until they’re a year old or older.
These life insurance policies are permanent, providing coverage throughout their lifetime, but the accumulated cash value flexibility remains the signature attraction of these policies. These policies can be canceled at any point through cash surrendering, cashing out the policy’s value or discontinuing premium payments. If cashed out, there might be tax implications for permanent policies. Whether you’re a parent or grandparent, exploring life insurance for your child could be key to unlocking a brighter future for the ones you love.
Contact us today to get started and be on your way to greater peace of mind. To connect with a team member, visit our locations page to find an office near you or give our team a call to discuss your best coverage options at 866.374.5084.
