The Hows And Whys Of Life Insurance For Children

The Hows And Whys Of Life Insurance For Children

As a parent, there are many decisions you have to make in life. When it comes to buying your life insurance, there is no overemphasizing the importance of this coverage. But what about investing in your child’s life insurance? As insurance providers increasingly market this as a great financial move for every family, parents get more confused with some rushing to buy such policies while others dither unsure of their value.

The number of parents buying these policies is on the rise according to LIMRA. A 2018 LIMRA Report says Life insurance policy sales for children under 18 make up about 20 to 25 percent of all insurance sales. However, the report says these numbers won’t go up due to lack of information on these policies.

Like with the idea of students going online and searching “someone to do my essay, there is the varied opinion on life insurance for children. This article demystifies the idea of life insurance or children and you will learn how it works and the benefits. Keep reading.

What Life Insurance For A Child Is All About

Ordinarily, life insurance targets adults and it is a form of security for the family in case the family head passes on. The family gets financial benefits from such a policy thus allowing them to continue living comfortably. It is the best investment parents can make for their kids. Now, when it comes to life insurance for a child, the idea is to protect the family financially in case of loss of a child.

More importantly, such a policy makes your child more insurable in the future. By offering protection of their insurability, this type of coverage makes it easier to buy more insurance cover irrespective of your child’s health. Financial experts reckon this is a smart move because it locks in affordable premiums at a young age. In another way, this insurance coverage serves as an investment or savings vehicle for the child’s future expenses.

As a parent, you always worry about your child’s future and for this reason, the idea of life insurance makes sense. In the traditional view of things, life insurance is for salary replacement alone but times are changing and you need to adapt in all aspects for your life.

Why Invest In Life Insurance For Your Child?

Some of the reasons to invest in life insurance for your child include:

Guaranteed Insurability

As a parent, you want your child to grow up healthy but sometimes they things don’t turn out this way. If your child contracts an illness or condition when they already have life insurance coverage, this will guarantee their insurability as an adult. They can buy more insurance cover at favorable terms than if they didn’t have life insurance coverage.

Guaranteed Level Premiums

The best thing about investing in life insurance for your child is the fact that the entire life insurance policy’s premium will remain level. It is a smart financial move that your child will appreciate when they come of age.

Assured Cash Value Accumulation

Life insurance of your kid is a great vehicle for saving. When properly designed, a life insurance policy for a kid featuring paid-up additions will create cash value faster.

Help In Time Of Grief

The loss of a child is a traumatic experience for a child and today; there are increasing cases of student deaths. School trauma has led to violence in schools leading to deaths and many other problems. Diseases can also lead to loss of a child. When you have life insurance for a child, the policy covers funeral expenses, counseling and all other costs. It offers great relief for the entire family at this time of mourning.

In case you take a policy loan, it is tax-free and cash value grows income tax deferred. Also, the death benefit is income tax-free.

The How of Life Insurance for Children

Now that you appreciate what life insurance for a child is all about, you should also learn the different ways to invest in the same. Take a look:

Children's Whole Life Insurance

This is the most common policy and it pays out a death benefit in case your child dies. While no parent expects to see the demise of their child, there are many cases where this can happen and you don’t want the situation to affect you financially. This policy comes with built-in tax-sheltered savings that transfer automatically to the child’s name on reaching adulthood. This not only gives your child potential long-term insurability but it is also a gift they will appreciate when they come of age.

Adding A Child Rider Or Endorsement To The Parent's Term Life Insurance

This is another available option for a parent seeking to buy life insurance for their child. In this case, the policy doesn’t act as a savings vessel and it is short term. The rider or extra policy feature comes at an added cost and the coverage is for a specified period say 10, 20 or 30 years. If the insured person dies during the term, the child gets benefits as indicated in the agreement.

The issue of school trauma arising from bullying, violence, substance abuse and medical conditions can lead to problems in the future of a child or even death. With life insurance for your child, it is now possible to mitigate such risks and protect the rest of the family against financial strain in case of a child’s death. If you have been looking for information on life insurance for your child or even research paper help in this topic, this guide is a good starting point.
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