Best Life Insurance Policies for Children
Most people may believe that the main reason to get life insurance is to replace income or cover debt if someone passes. So that begs the question, why get it for your child?
Children’s life insurance protects both the child and the parent or guardian from unexpected hardship and can be the financial boost a child needs to get them to the next level in life. Their coverage secures future insurability by delivering policies and benefits that will stay with them regardless of their age or health condition.
When it comes to finding the best life insurance policy for your child, you first need a clear vision of how you want the policy to work for them. All life insurance policies are not the same, and children have a list of affordable options they could qualify for with customizable benefits. These childhood benefits can stay on their policy even after they reach adulthood, at no extra cost.
Whole Life Insurance for Children
Whole life insurance policies are ideal for children, as they carry much more value when purchased for a child. Premiums are low and coverage is high.
Getting a life insurance policy is more expensive when you’re older, so people with children may find it safer to purchase a policy that their child can keep for the rest of their lives.
The cash value that grows in a whole life policy is especially useful for children. Cash value is the interest that grows on your policy, which you can borrow from and replace or withdraw permanently. Parents often let cash value grow for many years and then borrow the funds for things such as college tuition and school books for their children.
Custom Whole Life Insurance for Children
One of the best features available for a child’s policy is customization. You can get your child a custom whole life policy. Custom whole life allows you to build a policy that provides permanent life insurance while allowing you to choose how your long premium payments will last.
For example, you purchase a policy for your five-year-old but only want to pay premiums until they turn 25. You’ll pay premiums until they reach the set age, but the policy will remain in force. Your child will now have what’s called a paid-up policy.
With a custom whole life policy, parents pay premiums over a shorter period than a traditional policy, which requires premium payments until the insured reaches roughly 80 years old. This type of coverage comes at a higher cost but is a great long-term benefit.
Even after your child has a paid-up policy, they will still have coverage, and their policy will continue to grow in cash value.
Term Life Insurance for Children
Term life insurance is not a common choice for children when weighing life insurance options. Since term insurance prices increase with age, the policy will likely have a much higher premium once your child reaches adulthood. The most dependable way to purchase a term life insurance policy is to get a minimum 20-year term.
As a parent, a term life policy can bring you peace of mind that your child has fixed coverage for at least 20 years. Depending on the type of policy you decide on, you have the option to convert term life policies into whole life policies at the end of the term period and sometimes even before. This process can typically be done very easily with a life insurance agent.
Life Insurance Riders for Children
Getting life insurance for your children is not complicated. If you already have life insurance for yourself, you may find it easier to just add your child as a rider.
A rider is an additional coverage available on most life insurance policies. Adding a child rider offers extra coverage on your policy for a designated benefit amount until your children reach a certain age. Adding this rider allows you to provide your child with valuable protection without starting a new policy. The rider secures funeral cost and medical expenses and protects their insurability.
A term rider is term insurance added to your whole life policy. This rider increases the death benefit on an adult policy or provides term coverage to the policyholder ’s children.
One of the best benefits of a child insurance rider is the ability to convert the rider into a permanent policy down the line, without the child having to prove their insurability. They won’t be required to complete the standard application. Adding the rider is a quick and simple process.
With just one rider added to your policy, you will protect your biological, step, or adopted children, along with any children you have in the future. It only takes filling out a form to add a child to the policy. Some companies make it just that much easier by not requiring information about the children. As long as they are under 18, they are automatically covered.
Imagine the advantage your child has by being eligible for a lower insurance rate as an adult because of the steps you took for them as a child. Insurify makes it easy to view what’s out there. Explore all your options today by comparing life insurance quotes on Insurify.
Trust-Owned Policies
A trust-owned policy is pretty self-explanatory. Your life insurance policies, whether on your life or the lives of your children, are owned by the family trust. When a loved one passes, the death benefit will go into the trust. Funds can only be withdrawn with approval from the designated trustee.
A trust-owned policy is useful when families have policies exceeding $500,000 or parents pass while their children are still young and need guardianship. Since the trust owns the policy, this policy can grow in value and safeguard the future of many generations. Since the policy beneficiary is the trust rather than any one person, the policy and financial protection can stay in the family forever.
