When buying life insurance, we concern ourselves with whether to buy whole or term life, or if the amount purchased is adequate, or will current health problems force us to pay higher premiums. However, we don’t often think of life insurance for our children. After all, children are young and healthy and we pray that they live to a ripe healthy old age.
Part of being a responsible adult is praying for the best and preparing for the worst. After all, isn’t that why people buy life insurance anyway?
The question remains, should you buy life insurance for children?
If your child is the primary income earner, like some of Hollywood’s child stars, then it’s a no brainer. It is obvious that the answer is yes. However, for families like mine and dare I say yours, where our children are more of an expense than income producer, you might want to consider insuring them also.
A few other reasons for buying life insurance for children:
- It protects the child’s ability to get life insurance in the future. If there is a family history of genetic traits that, once surfaced, might preclude a child from securing insurance later on in life, buying the insurance now will protect their future ability to get life insurance.
- Whole Life insurance policies may be used as an investment option. The younger the insured the lower the premium and by purchasing a policy while the child is very young gives the policy more of a chance to grow in cash value.
- In the unfortunate event that something happens to a child and as a parent, guardian or care giver, we are placed in the undesirable position of having to plan a funeral and burial, a life insurance policy will cover those costs.
Should you buy a separate policy or add a child to an existing policy?
This depends on your situation. Most insurance companies will allow you to purchase a rider on an existing policy to insure dependent children. Usually the maximum limit is $20,000 for all children added to the policy (this may vary depending on your insurance company). The coverage can begin for a child as young as 15 days old to a child as old as 18 years. It continues until the child reaches 21 (sometimes 23 or 25, depending on the insurance company ), or until you, the insured, reaches 65, whichever comes first. Basically, the rider acts as a small term policy to cover funeral and burial costs. There is little if any insurance company underwriting involved.
The other option is to buy a separate policy for your children. The downside, however, is that the minimum policy limit is higher. It may be as high as $50,000. This amount may be more than you need, but insurance companies fully underwrite these policies so the premiums may be lower.
With the internet at your fingertips, it’s easy to find companies to give online quotes so you can investigate which option makes sense in your situation.
For more information on life and other types of insurance, visit An Insurance Blog.