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Is Life Insurance for Babies Really Necessary?

When you are ready to take your bundle of joy home from the hospital, the last thing you are thinking about is running to your insurance agent and purchasing a life insurance policy for the baby.

life insurance for babies

In fact, you are more likely to buy more insurance on yourself than you are to buy a policy on your child. Many parents who receive mailers and advertisements on life insurance for babies think that idea of insuring their child with a death benefit is ridiculous. Read also: Top 8 Myths About Life Insurance.

If you think this way, it is important to discover how you can provide a better future for your child with a life insurance policy. Discover which type of insurance is best, what you should consider when investing in a policy, and how the insurance can become one of the best investments you made during your child’s early life.

What Are the Misconceptions of Babies Life Insurance?

If you ask some people who are against life insurance for babies why they feel that way, chances are they will answer that life insurance is an income replacement tool and nothing else. While some life insurance plans are designed to replace income when the breadwinner passes away, not all life insurance plans work this way. Read also: Why Seniors Need Life Insurance?

Term insurance plans may be for income replacement, but whole life insurance plans are designed to act as a savings vehicle as well. If any of your friends or your family members are saying that children’s life insurance is a waste of money, it is imperative that you understand the benefits before you decide not to make the investment.

What Type of Life Insurance Should You Buy For Your Child?

You should almost never invest in a term life insurance for your child unless you plan on converting this plan to a permanent plan in the near future. When you are comparing quotes for insurance, you may want to ask if the company offers any type of incentive to convert to a permanent plan. If you want to skip all of the work, you should invest in a permanent plan, like whole life, initially. A whole life policy is fairly inexpensive when your child is young and healthy. It is not until you age that whole life insurance plans grow to be very expensive.

Why to Buy Babies Whole Life Insurance?

Now that you know which type of policy to focus on, you may be wondering why whole life?

One of the main benefits of this insurance plan is that it will act as both life insurance and a savings vehicle for your little one. The premiums you pay will gain cash value in a cash account. This account will either be added to the benefit or can be withdrawn from the policy by you or your child. All of the earnings are tax-deferred and you can make withdrawals and keep the policy active at the same time. Read also: Life Insurance Later in Life.

Another benefit of buying life insurance for your child is that your child will have their plan for the rest of their life as long as the premiums are paid. If your child is diagnosed with a medical condition when they are older, you will have peace of mind in knowing they have insurance even when they are not insurable. Some policies even have guaranteed renewal riders built-in where owners can increase the benefit on the plan every certain number of years. If you have ever known someone who could not qualify for life insurance, you know how much this will mean in the future.

Riders You Should Look For On Life Insurance Plans

Riders are extra forms of coverage you will pay a small premium for each month. While many people reject life insurance riders, there are riders you should not reject. Here are important riders you should always add to your babies life insurance policy:

  • Guaranteed Insurability: This rider means that you will not need to prove insurability when you want to increase coverage. Make sure you find out if this rider expires at a certain age or had any other special provisions.

  • Waiver of Premium Rider: This rider will waive premiums when the policy owner becomes disabled. Keep in mind that the policy older is generally the parent until ownership is transferred to the child.

Now that you know what type of insurance you should buy for your child, it is time to start requesting quotes. Make sure you keep the previous information about life insurance for babies in mind when you are comparing quotes, and make a wise an investment. Read also: Your Guide to Understanding Life Insurance Quotes for Young Adults.


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