One may ask, Why buy life insurance for children? Is it really needed? Besides, they are just kids and nothing can go wrong if you are careful. Children’s whole life insurance, which is a type of permanent life insurance, is meant to protect the covered person’s finances until they die. Although the general notion of life insurance is well known, the focus of this article will be on life insurance for children. No parent wants their child to have to use it, but it’s better to be safe than sorry. Let’s take a look at the best child life insurance policies and why you should insure your kids.
Life Insurance for Children
Life insurance for kids is a type of coverage that protects the child’s future. Most of the time, buyers are parents, guardians, or grandparents.
Children’s life insurance is an option for certain families who want to ensure financial security for their families in the event of the unthinkable by locking in a low rate and protecting their insurability. Although it is not as effective as other savings plans, children’s life insurance can be advertised as a means of putting money down for college.
Again, life insurance for children is a contract with an insurance provider, just like life insurance for adults.
When it comes to purchasing life insurance for a child, it is important to note that there are typically two primary methods available.
Acquire an individual life insurance policy exclusively for the child, which will be the primary topic of discussion in this article.
When a parent makes the decision to purchase life insurance, they are often provided with the option to include a supplementary feature known as a “children’s term life insurance” rider. The rider mentioned provides financial compensation in the unfortunate event of a child’s passing. However, it is important to note that the coverage offered by this rider ceases to be in effect if the parent passes away before the child. It is possible to convert the rider into a permanent policy for the child at a specific age.
Life Insurance for Children Overview
Typically, children’s life insurance is comprised of a whole life insurance policy. Insurance protection can last a lifetime, provided payments are made on time every month. In most cases, premiums are set and will not increase as time goes on. In addition, remember that a portion of your premium goes toward the cash value component of your policy. This cash value is available to the parent at any moment during the child’s lifetime, allowing them the freedom and financial security to meet whatever needs or aspirations may arise.
Whole life products, a subset of permanent life insurance, are the most common type of policy being discussed here. As long as the premiums are regularly paid, the child will be covered for the rest of their life. Policy coverage amounts are often found to be modest, frequently coming in at or below the $50,000 mark. It’s also worth noting that once premiums are set, they won’t change, no matter how much coverage is used. According to Quotacy, a life insurance company, the average yearly premium for a $25,000 term life insurance policy for a baby is about $150.
Best Life Insurance for Children
While buying life insurance coverage for a child may not be something you do on a regular basis, it is still important to browse around and compare prices before deciding on a provider.
Now, let’s see the top life insurance companies for children:
#1. Mutual Omaha:
Mutual of Omaha is well-known for being one of the first insurance firms to cover people with non-professional occupations in the event that they become ill or injured. Currently, the company offers Medicare supplement insurance as well as term and whole life insurance. The group has an A+ rating from the well-known rating service AM Best.
Mutual of Omaha offers several unique features, including a disability income policy and a return of premium option for term coverage. Furthermore, most plans provide coverage for terminal, critical, and long-term illnesses. Express Term and Express IUL insurance, on the other hand, cover all three. This is why we believe they are the best life insurance company with living rewards.
If you’re looking for affordable life insurance for your kids, look no further than Mutual of Omaha.
Whole life insurance with age limits ranging from 14 days to 17 years is available for children.
#2. Thrivent:
Thrivent provides juvenile life insurance to children up to the age of 18. It functions similarly to other long-term strategies for children. The prices do not increase until the policyholder reaches the age of 70; the cash value accumulates automatically, and the policyholder can purchase more coverage at any time without going through medical underwriting.
If your child becomes disabled as an adult, their life insurance premiums will still be paid. Through Thrivent, you can add a paid waiver for premium riders to their plan. A medical exam is not required to apply for coverage.
#3. Global Life:
Globe Life is a simple online service that allows you to obtain whole life insurance without having to visit a doctor or speak with an insurance agent. From birth to the age of 24, you can get life insurance with payouts ranging from $5,000 to $30,000. You can begin receiving benefits on the first day of your insurance without needing to visit the doctor.
From our study, Globe Life offers the most reasonable premiums for babies. Globe Life also provides locked-in rates, which is an added benefit. This means that the premiums you pay will remain the same for the duration of your child’s life. To increase the attractiveness of the offer, Globe Life sets the initial premium for the first month at $1.
#4. Penn Mutual:
Penn Mutual is a company that provides numerous sorts of long-term insurance for children. Because of this, it distinguishes itself from other top companies in the same area. Parents can purchase many types of life insurance plans for their children, including whole life, variable universal life, adjusted universal life, and one-year term policies.
The one-year term policy can be converted to a permanent policy, making it a viable choice for people who only require coverage for a short period of time or who cannot afford the higher expenses of a permanent policy right away. Penn Mutual is regarded as the finest choice for various types of plans due to its extensive coverage options.
#5. Gerber Life College Plan:
Gerber’s plan promises a minimum payout of $10,000 and a maximum payout of $150,000, depending on your age and the age of your child. If the insured dies before the term is up, Gerber will pay the full benefit to your child or someone else you designate.
Your child will be able to put the entire term amount toward their college expenses once your term ends. The payout monies from the Gerber Life College Plan can be utilized for anything, unlike a 529 plan or an educational IRA. Your child can use these funds for anything that will give them a head start in life, such as a down payment on a house, a company startup, or education fees.
#6. Forsters Financial:
Foresters Financial was established in 1874 and has been offering life insurance to the general public ever since. According to the National Association of Insurance Commissioners, the number of complaints received by this organization is relatively low when compared to others. A.M. Best has also granted it an “A” for financial soundness.
Children’s Whole Life Insurance
Whole life insurance, which is a type of permanent life insurance, is meant to protect the covered person’s finances until they die. According to the Insurance Information Institute, the type of fixed life insurance that people buy the most often is whole life insurance.
Compared to term life insurance, whole life insurance is more expensive because it covers you for your entire life and can accumulate financial value.
Whole life insurance also has an extra benefit called cash value. The amount of your payment that can grow over time is called the cash value. Anytime your insurance has enough cash value, you can borrow against it or cash it in.
Whole life insurance usually covers the individual until they are 100 or 120 years old. The strategy usually lives up to its name, since it lasts for so long.
Additionally, getting whole life insurance can help you make sure that your kids’ financial needs, no matter what they are, will be met after you die.
The Pros and Cons of Whole Life Insurance
Pros
- There is no time constraint.
- Partially Investing
- Insurance for the rest of one’s life
- Guaranteed or fixed premiums
- Potential for profit.
Cons
- Beneficiaries are not entitled to the cash value.
- Possible taxable withdrawals
- Initial high commission rates
- Investment yields a slow rate of return.
- Costly premiums
- Cash value loans that are still outstanding will reduce the death benefit.
- It takes policyholders 10–15 years to accumulate adequate financial value for a loan.
Why Buy Life Insurance for Children?
Guaranteed protection, the ability to lock in inexpensive premiums, and financial flexibility are the three primary benefits of purchasing life insurance for your children.
The following are why you should buy life insurance for your children:
It Pays the Costs in the Event of the Worst-Case Scenario:
Parents acquire life insurance for their children primarily to protect them. Giving your child life insurance when they are young can put your mind at ease if you are concerned that they will have difficulty receiving it later in life due to a health issue.
Life insurance for children can be utilized as an investment, according to Vincent Birardi.
Higher Education Funding and Initial Vehicle Purchase:
Most policies for insuring a child’s life have cash value components. The cash values/monetary worth rises over time, usually at a predetermined rate And if that is the case, some of the premium will go into a savings account that earns interest. While your child is still alive, you can access the cash value or borrow against it.
Can you get life insurance for your child?
Yes, in order to buy life insurance for your kid, you will need your child’s full name, date of birth, and Social Security number.
What type of life insurance is best for a child?
Omaha Mutual Insurance Company is the best for a child, as the company offers Medicare supplement insurance as well as term and whole life insurance.
Is It Smart to Get Life Insurance for Children?
Yes, Steve Meldrum, an insurance specialist from Swell Private Wealth, explains that by purchasing life insurance for a child, you are safeguarding them against the possibility that they will engage in risky activities or hobbies.
How much life insurance do I need for my child?
Each payment is unique since each parent has a unique motive for obtaining life/health insurance for their child.
One example of a rider’s coverage that may be sufficient is if you are purchasing life insurance for a child to cover their burial expenses. Adding a rider to your current life insurance policy will cost you roughly $2.50 each month. If your child dies, you will receive between $10,000 and $15,000 in compensation. This sum should be sufficient to cover the entire or nearly the entire expense of the funeral.
Is the Gerber Life Plan Real?
Yes, the Gerber Grow-Up Plan is a real-life insurance policy with a cash-value account that allows parents to save money in the event that their kid dies too young. When your children reach the age of 21, they can take ownership of this account, which will provide them with additional financial stability if they choose to pay insurance premiums when they become legally eligible. Gerber will double the death benefit, up to $100,000, when you transfer the account. You or your adult children can cash out the insurance and use the money for anything you like, including debt repayment or taking out a loan.
See Also: BEST WHOLE LIFE INSURANCE COMPANIES OF 2023
Bottom Line
Why Buy Life Insurance for Children? is crucial and an important one that no parent would want to tackle without first learning the ropes. Some children develop potentially hazardous habits or hobbies as they mature. In the event of an accident, illness, or death, a child’s life insurance policy will pay out.
