5 Things to Keep in Mind When Considering Life Insurance on Your Kids

Ross Quade | Life Insurance | 12 Jul, 2014 | No Comments

Child life insurance policies are only a small portion of the life insurance market. However, they are now hotly debated due to the fact that they have been on the news recently in relation to a Georgia man by the name of Justin Ross Harris. According to People.com, Ross Harris was accused of murdering his two-year-old child after leaving him in an extremely hot car for a prolonged period of time. Sadly, Ross Harris was more concerned about collecting the almost $30,000 in child life insurance then he was with the death of his son. One of the many things that this tragic case has done is painted child insurance in a bad light. Is it truly something that is needed for your child? If you are considering obtaining life insurance for kids then here are five things you should keep in mind.

How Child Life Insurance Policies Work

The parents of the child or someone who is directly related to them such as a grandparent usually purchases this type of life insurance. Life insurers require that anyone who purchases a child life insurance policy have an insurable interest for the child that is being covered. This means that the buyer actually wants the child to live. Something that is greatly debated when it comes to Mr. Ross Harris. The premium of this policy varies greatly according to the policy’s terms. However, in general the higher the death benefit the larger the premium.

There are Conditions that Come with the Death Benefit

Life insurers require extensive documentation of how the child passed away, and so you will not receive a death benefit if the manner of death comes into question. This is especially the case if the beneficiary is accused of causing the death of the child.

You Can Use Your Policy as a Savings Device

Most life insurance policies come with a cash value. The amount of this is based on the premiums that are paid out over time. When it comes to a child life insurance policy, it is often the case that the grandparent or parent purchases a policy in order to give the child the option of cashing the policy out later in his or her life and using it as an income source. This can in fact be a valuable means of giving your child a cash source.

Child Life Insurance Policies Usually Come with Smaller Benefits

Life insurance for adults, whether they are purchased through a workplace or individually, usually offer a much greater death benefit compared to a life insurance policy purchased for a child. This is often because parents purchase a life insurance policy for their child simply to cover their funeral expenses, which typically does not cost more than $5,000-10,000. On the other hand, adult life insurance policies are used in order to cover a wider variety of things.

Child Life Insurance Policies are a Small Part of the Bigger Picture

Child Life insurance policies are a very small component of the larger life insurance market. In fact, it is estimated that the life insurance policies that are taken out on kids are less than 1% of the entire life insurance market. This could be due to the fact that many life insurance experts do not believe child life insurance is a vital part of protecting your child. In fact, many believe that life insurance is a way to give economic security to children and other family members if a provider passes away, and not the other way around, and so it is not necessary to have one for your child.




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