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Why Life Insurance for Children is a Great Investment

You see advertisements on TV all of the time stressing the importance of buying life insurance for children.

Life Insurance for Children

While you understand the importance of the breadwinner having life insurance, you may not really understand why any parent would take time to cover their child with a death benefit. Read also: Life Insurance Options for Diabetics.

After all, you cannot put a price on your child and a life insurance benefit is that last thing you would want to receive if anything were to happen. Many parents overlook just how beneficial life insurance can be for a child. You need to look past all of your assumptions and understand just why parents are buying children life insurance. Review the living benefits your child will receive and start investing in your little one’s future early.

Why Do Parents Buy Permanent Life Insurance on Their Children?

Before you buy any type of insurance on your child, you need to understand the difference between permanent and term life insurance. Term life insurance is a temporary policy that will provide death benefits until the plan expires. A permanent plan, like whole life, will stay in force for as long as the premiums are paid. In addition to the death benefit, policyholders can accrue cash values on a permanent life insurance plan. Read also: Life Insurance is Necessary for Your Loved Ones.

Parents or grandparents who choose to buy life insurance on their children should always buy a permanent plan. By making this purchase, you are making an investment into the child’s future. Some of the benefits of this type of investment vehicle include:

  1. Accrue money over time while paying your premiums.
  2. It is a tax-deferred savings vehicle so benefits are paid free of interest.
  3. Paying premiums provides the family with cover while they are accruing interest.

The Other Benefits of Insuring Your Child With Permanent Life Insurance

While the tax-deferred growth is enough of an advantage for you to purchase whole life insurance on your child, there are also other benefits that you should consider. As you may know from experience, life insurance companies require applicants to complete a medical questionnaire or a medical exam to qualify for coverage. One of the main reasons why insurers require this is to look for pre-existing conditions that may pose a higher risk to the company. Read also: Is Life Insurance for Babies Really Necessary?

When your child is young, the medical requirements are much lower. This means that the younger you buy insurance, the easier it is to qualify. Once your little one qualifies, they have insurance benefits for life. This means that they will have cover if they are diagnosed with a pre-existing condition that may have disqualified them from insurance as an adult.

Another benefit you must consider is that many insurers allow the owner of the policy to increase the benefit on policy anniversaries without ever having to proof insurability. When the policy you choose has this special rider built-in, your child can increase their insurance without ever answering questions. This is extremely convenient and may be essential if they are not insurable. Read also: Life Insurance Rates for Seniors.

When you are requesting life insurance quotes for children, you need to make sure you are choosing a permanent plan from a respected insurer. While they cannot appreciate the gift now, they are sure to appreciate it in the future. Whether you are looking to save money or you are trying to teach your teenager financial responsibility, life insurance for children may be the right way to go.


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