Basic Guide to Child Life Insurance
Child life insurance is understood by very few parents. In fact, most parents fail to even give it a second thought. A parent may think: "Why insure my child?" The question is valid. Why insure a child when a child has no steady income and no dependents? Isn't the point of life insurance to replace income that is lost and support a family that loses the sole breadwinner?
In order to truly understand child life insurance, and why your child should have it, you need to think about the little-known benefits of child life insurance.
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Child life insurance benefits
Lifetime protection. Child life insurance provides protection for your children for the entirety of their life. If your child receives a whole life insurance policy early, and then it's later discovered that your child has a pre-existing medical condition, then the life insurance company can't deny coverage to your child, or increase rates due to the new health condition.
Lower costs. Whole life insurance for your child means indefinite rate protection. Lock in your child's rates early and it could save them thousands upon thousands of dollars later in life!
Start-up funds. Child life insurance may include a cash value account, which increases by as much as five times the moment they turn 21. Cash value accounts are an excellent tool for your children to use throughout their life, whether they want to use it as leverage for educational loans, mortgages, investments, or to increase their coverage later in life.
Types of life insurance for your child
Child's life insurance comes typically in two forms of coverage, term and whole. Factors like your child's age, your income and other investments will help you decide which one is right for you.
Children's term life - Very straight forward, you pay a fixed amount for a select duration of coverage, usually 10, 20, and 30 years, if anything happens to your child before then you receive the full policy amount.
Children's whole life - A little more complicated in that this coverage lasts the duration of the child's life and not a specific time. You are the acting beneficiary until the child becomes an adult, then they take the policy over. These have great investment return values in the long run, but are sometimes less flexible than term life insurance plans.
It's often much easier and cheaper to get a policy for a child than a young adult. Child Life Insurance is here to offer you helpful information on getting a policy for your child and connecting you with providers to the plans you need to cover your children.