Is it necessary to buy Life Insurance for your child?
If you’re considering buying life insurance for your child, let me congratulate you on attempting to find out the truth behind life insurance on children. Most people don’t even get to this stage! There are many who believe that life insurance on a child is a complete waste of money because of the fact that children don’t earn and therefore life insurance as a form of income-replacement is not required. This is not true. There are very good reasons why life insurance on children is NOT a waste of money, and we will attempt to break it down here for you so you know why and can make an informed decision.
It is important to plan for your kids’ future both legally and financially. Planning is risk management, and when you have fall back options in place to take care of inconveniences or calamitous events, you also create the ability to heal and rebuild for yourself. Life insurance is a risk management tool that creates cushions to help you deal with the monetary burden of death, like funeral bills or outstanding medical bills that insurance won’t cover. You can find more about life insurance online on an aggregator website that hosts life insurance quotes online. Aggregator websites are good places to start if you’re looking to learn the basics about life insurance. Some, like AccuQuote, also sell child life insurance so if you need a quick quote, you can always get one.
Check these strong reasons to consider getting life insurance on a child:
1) If you have a history of health conditions that run in the family, this is good enough reason to get your child covered. If your child were to end up with this condition in adolescence or young adulthood, this means (s)he would grow up with the risk of being uninsurable in the future. Having prior protection through a child life policy will hedge against that, and allow increase in life insurance cover at a later stage without a medical examination.
2) Funeral costs are not “affordable” any more. Even if your LOs do not run up large hospital bills, a low cost funeral is at least $10K today (estimating on the far lower end). This can quickly eat into a family’s savings and too many families have spent crucial time trying to arrange for funeral expenses instead of grieving their loved one’s loss.
3) Can help save for college. Many financial gurus don’t advocate permanent life as a savings instrument (individual policies on a child can only be permanent life) but it does provide some growth, albeit slow, especially if you don’t touch it all the way till you can gift it to them when they come of age. Though you should know that you don’t have to gift it to them; they cannot legally ask for it since you’ve paid into it and you own it. Also, you cannot buy them life insurance unless you and your spouse are adequately insured yourselves. Insurers make sure to build this caution into child life policies especially after a spate of murders that was found on a father who would kill his newborns shortly after buying large life insurance policies on them.
At the very least, get a rider on your own term life insurance policy. This rider will cover your child for a small amount that is usually sufficient to pay off funeral bills. Some policies allow these child riders to be converted to whole life policies when the children come of age (18 years old). This convertibility is also sometimes allowed without a medical examination, so it’s a great way to have coverage extended on a child even though there might be a chance that (s)he is uninsurable. I would strongly urge parents to consider this option. It only costs a few cents a week (even cheaper if you have group life insurance) and while none of us want to think of losing our children, preparing for it is not wrong either. You won’t be “inviting trouble”, just doing the right, responsible thing for you and your family.
