It's distressing to plan for the possibility of a child dying, and the odds of a child dying are statistically low. Yet ensuring their life can provide peace of mind about having to struggle with the financial fallout from their death.
Insuring your kids at an early age can ensure they're covered against events that could complicate getting a policy later — such as developing a serious medical condition or taking up a high-risk profession or hobby, such as skydiving.
And if you want to increase the death benefit on a child’s policy, many insurance companies offer insurance riders that allow you to buy additional coverage without the need for a medical exam.
Whole life insurance for children
If you're considering life insurance as an investment in your child's future, however, a stand-alone whole life insurance policy can offer several benefits.
The cash value savings component on a whole life policy, for example, could help your children pay for college and other expenses as they grow up. And parents might enjoy the flexibility of these funds over, say, holding money in a 529 plan, which can only be used for educational expenses.
Cash value, the investment component of permanent life insurance, has more time to grow with a policy that’s bought for a child. In a pinch, you can even borrow against the value or use it to help pay the policy’s premiums.
The policy’s cash value may not be your primary reason for purchasing life insurance, but it’s an excellent additional benefit.
Child life insurance rider
A children's whole life insurance policy can help pay for funeral costs, but there may be a better option if these expenses are your primary motivator for purchasing children’s life insurance.
Adding a rider to your term life insurance policy that covers funeral costs might be less expensive than getting a whole life policy for your child — in part because permanent insurance typically costs much more than term coverage for the same benefit amount.
Regardless of whether you choose an add-on or a separate policy, plan for the life insurance payout to cover not only funeral expenses but also the possible financial setbacks that could accompany grieving for your child. Those costs can include having to take extended time off work without pay and paying for grief counseling.
Ready to start a policy for your children? Give USA Mutual Insurance a call at 718-285-6500 or visit our website at www.usamutualins.com