Purchasing life insurance for your children today is a wise investment for their future. Not to mention that it's a one-of-a-kind present and a simple and inexpensive method to help children establish a financial foundation — moreover, it shows you care.
How does life insurance work for children?
Children's life insurance operates similarly to adult life insurance: the policyholder pays premiums, and the policy pays out to a beneficiary (in this instance, a parent or guardian) if the insured dies while the policy is active. Because most children's life insurance is whole life, it covers them for the rest of their lives.
Most child policies are marketed as financial tools that serve as an investment for educational expenses, lock in affordable premiums for your child, protect your child’s insurability, and cover funeral expenses if your child passes away.
It is an affordable choice
Simply put, buying life insurance for a child is usually less expensive, and it ensures that they will be covered as adults, regardless of how their health changes. What's the best part? Payments are fixed for the rest of their lives.
As they grow old, so does their policy value
A participating whole life policy includes life insurance as well as a guaranteed tax-advantaged cash value (sometimes known as a "emergency fund") and dividends (a.k.a., a return on your investment that also has the potential to result in significant growth). That is amazing value.
Guarantee your children’s insurability
When you buy children's life insurance when they're young and healthy, you're providing them with long-term security. This can be really beneficial to your children, particularly if their health deteriorates. For example, if your child is diagnosed with a serious disease that makes it impossible for him or her to receive insurance as an adult, you can rely on the life insurance you paid for when he or she was young.
It is easy to qualify when you are young
Because of age-related health diagnoses, high-risk employment, engagement in dangerous hobbies or extreme sports, life insurance becomes increasingly difficult to obtain as we become older. With that in mind, this is one purchase that you should not put off.
A gift for their future
When your children are older, they will have access to a cash value, which will help them pay for their first car, tuition, a wedding, or a down payment on a home.
The advantages of taking out children’s life insurance
Premiums are lower due to children’s young age and good health.
Your children could enjoy life insurance they won’t have to pay for all their lives.
Also, their insurability will be guaranteed if they decide to keep their insurance when they are adults. They can choose term, permanent or universal life insurance.
Some insurance policies, such as critical illness disability insurance, allow you to add more coverage.
If your child were to die, you would have financial protection that would enable you to take the time you need.