Not a moment goes by when parents aren’t worrying about their children. Is he the appropriate height and weight for his age? Does she get along with other kids? Will they ever eat their vegetables?
One thing parents don’t often think about is ‘do I need life insurance for my child?’. Some may even frown on the idea of insurance for minors because of a life insurance policy’s primary purpose of replacing the income of a working adult. However, there are many other reasons why buying a life insurance policy for your child could be a good idea for you. Here are a few:
The Time and Resources to Grieve.
There is likely nothing more devastating than the loss of a child. In such an unfortunate and untimely event, day-to-day responsibilities might be overwhelming – the demands of your job, paying the bills, and having to care for other children in the household. The reality is you might not have enough paid sick or vacation time from work to take care of yourself, your spouse or your other children during this difficult time. If the unthinkable were to happen, would you have done enough financial planning to have the resources to go back to work on your terms?
Cash Value and Living Benefits.
The cash value earned from a permanent life policy (such as whole life, universal and variable life) can be withdrawn or borrowed against, providing living benefits that can used by your child as he or she gets older for many things such as:
- College tuition and expenses
- Financing a vehicle
- Paying for a wedding
- Collateral for loans
If you opt for a whole life insurance policy for your children, ask if there are penalties for early withdrawals before a certain age. Building cash value shouldn’t be the main reason you buy a life insurance policy for your children, but the right policy can include a financial perk.
They’ll Always be Insured.
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 life insurance policy when they are young is that they will always be covered regardless of their future health as long as premiums are being paid.
Guaranteed Insurability.
Some life insurance policies for children come with an optional guaranteed insurability rider/endorsement that may be available for a nominal cost. As your child grows into an adult, this rider allows you 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.
A Locked-in Rate.
Life insurance premiums for minors can be very affordable. 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 like Nonmed Insurance Inc. 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.
Disclaimer: It is important to note that this article was not written by a qualified Life Insurance broker and should not be considered legal advice. Please make sure you seek advice from professionals before purchasing any form of financial product.