Is Life Insurance for Children a Good Idea?
No one wants to think about their child dying. It’s been said that losing a child is one of the worst experiences you can go through. Hopefully, it’s not something you ever have to find out for yourself.
Despite how horrible such a loss would be, preparing for the worst is sometimes the best thing you can do. After all, you wouldn’t want to compound that grief with financial complications. But that’s only one reason you should choose life insurance for your children.
The Benefits of Insurance Policies for Children
Most of the insurance policies purchased for children are called whole life policies. This is very different from the term life policies that are often popular with adults (adults can, of course, also purchase whole life polices). While a term policy provides coverage for only a set amount of time, such as ten years, a whole life policy provides a lifetime of coverage as long as the premiums are paid.
Because children are a low-risk group, their whole life insurance premiums are going to be much lower than those for adults. Plus, the policy will have a longer time to build up cash value. Unlike term life policies, part of the premiums paid for whole life insurance is invested and thus causes the policy to actually increase in value over time. Later, the policy can be cashed in for that cash value or loans can be taken out on the value.
With the majority of whole life policies, the option exists to increase the coverage when the child becomes 18. He or she can choose to add additional coverage at any time, although most of the plans will automatically double in coverage amount at this time anyway. Most young people don’t give a second’s through to the needs of life insurance but you’ll have a policy that will protect them until they are old enough to start realizing its importance.
Another Good Reason for Insurance Early
You’ve probably heard news stories about the increases in childhood diseases, such as diabetes and high blood pressure. Well, this creates another important reason to invest in whole life insurance for your child.
If he or she develops a chronic health condition at a young age, can you imagine how difficult it will be for them to secure life insurance once they are an adult? Chances are they won’t be able to find a policy that will cover them. If they do, the premiums will be outrageous.
However, if you’ve purchased a whole life insurance policy for your child before the development of this illness and have continued to pay the premiums your child will not have to worry about coverage. Whole life insurance plans cannot be ended just because the person covered becomes sick.
While most of us don’t want to imagine our child growing up unhealthy or dying at any time in the near future, as parents we must do what we can to protect them. Sometimes that means thinking ahead and purchasing a life insurance policy.
June 18, 2009, Posted by Rainy Day Mitch