According to the proponents, life insurance for kids is meant to secure your kid's future. It's seen as a financial option for offsetting your kid's future expenses-including college fees, covering funeral expenses in case of death, and protecting your kid's insurability. However, experts don't recommend taking life insurance for kids. According to them, investing in life insurance for kids isn't a sound investment. You should consider these policies if your child is suffering from a certain medical condition. So, if you are planning to invest in life insurance for your kids, it's important to get the basics right. The following key points will help you digest everything to do with life insurance for kids. Keep reading.
How to Purchase Life Insurance for Your Kid
There are several insurance companies that sell child life insurance. You can protect your child by purchasing children's whole life insurance or adding a child rider to your own term life insurance policy.
Is It A Worth Investment?
Permanent life insurance policies usually come with cash value. This means that you'll get life insurance plus a death benefit, but some of your premium payments fund an account that's expected to grow in value over time. And that's exactly why most parents find life insurance for their kids appealing. Not only do they get protection but they also get interest-earning savings.
Cash Value
Depending on the type of life insurance policy you purchase, the deductible cash portion earns interests from your main life insurance policy, or at a predetermined rate chosen by the company. Some whole life insurance policies guarantee a minimum cash value, whereas other types don't. So, take time to compare different life insurances before making your final decision. Compare plans here.
Key Takeaway
Whole life insurance usually comes with higher administrative costs and you've no control over where your money is being invested. If you want to insure your child's life, consider adding a child rider to your life insurance policy. Child riders typically provide a death benefit in case one of your kids passes away. With a single rider, all your children are covered and the add-on is relatively affordable. You can purchase a unit of 1,000 dollars of coverage for about 5 dollars per year.
Your child's insurance policy won't lapse when they turn eighteen or twenty-one. Instead, they actually get to keep it. And this guarantees that they'll have some life insurance coverage throughout their lives. However, you may want to consider purchasing child life insurance to safeguard their insurability, if unfortunately, they develop a medical condition below the age of 18.
The Bottom-Line
Of course, kids are a blessing in any home. They bring joy. They make you happy. They keep you company. But is it wise to take life insurance for kids? Well, this is a question surrounded by lots of opinions. Generally, you shouldn't consider life insurance for kids. But if you should, the decision should be informed by your kid's medical condition. The above key points will help you make an informed decision.
