What You Need To Know When It Comes To Life Insurance For Young Children

Mark Burback | Children, Death, Insurance, Life Insurance | 3 Sep, 2015 | No Comments

If you are like a lot of people, when you think of life insurance, your children are probably not one the first things that come to mind. After all, many people assume that life insurance is strictly for adults or older individuals. However, this could not be further from the truth. In fact, life insurance for your children could be one of the best decisions that you ever make for them. Nothing is more precious than your child’s life and parents should know that the cost of raising a child has grown substancialy over the years.

Why Buy Life Insurance For Your Children?

While not always the most pleasant thing to think about, investing in life insurance for young children is primarily done for the following reasons:

  • Death of a Child: Although it is difficult to even consider, the death of a child can have serious financial implications. With final arrangement expenses reaching upwards of $7-10,000, the death of a child can impact families emotionally and financially, only adding stress to a dire situation. Families without coverage are left to pay for these services out of pocket.


  • Leave from Work: The loss of a family member can be emotionally draining. Are you prepared to go back to work immediately? Without life insurance, you may be left with no other option. Expenses add up quickly. The additional time off work is necessary for healing.


  • Counseling: Should your child pass; it is vital that you and your family are able to receive the proper grief counseling. Is your health insurance going to be able to cover these expenses? Are you in a position to pay out of pocket? Having life insurance can significantly lower your expense for these services.


  • Unexpected Medical Expenses: You never know when the unexpected might occur. Whether it is a major diagnosis or an injury, without the proper insurance in hand before the diagnosis occurs, you could be looking at a much more difficult situation than it needs to be. Severe diagnosis can sometimes render applications to be denied or at the very least experience astronomical rates for coverage.


  • Substance Abuse: Although this may not occur for years down the road, smoking and illegal substance abuse typically lead to a higher rate class or even can render someone to be completely uninsurable all together. Buying life insurance early on for your child is a safeguard against these often unforeseen circumstances.


  • Lower Rates: Typically, the longer you wait to purchase insurance the more expensive it gets. While you may not need insurance for your children at the moment, you never know when you will. With rates increasingly rapidly with age, purchasing life insurance for your children at a young age can be a worthwhile investment.


What Options Are Available?

When you are looking to invest in life insurance for your children you can do so in one of three ways.


1.) Utilize Current Employee Benefits

This one can get tricky, so be sure to read the fine print first. Some employers will offer life insurance coverage, but the coverage is often minimal. With most plans capping at around $25,000 in total coverage, you will likely need additional coverage to cover all of your expenses. In addition, not all employer plans will cover your children, so be sure to specify what you opt-in options are.


2.) Add to an Existing Policy

If you already have life insurance, this can be a good option. Although often more expensive than employer coverage, private life insurance typically offers additional benefits and coverage. In addition, with some policies you have the option to cover all of your children under one plan, which can save you money if you have multiple children that need coverage. Although these types of plans often include benefits of only up to $25,000 per child, you will also typically have the option to purchase additional coverage.


3.) Opt for a Stand Alone Policy

If you’re looking for a completely custom policy for a single child, this can be a great choice. With a wide array of coverage options ranging from as little as $10,000 to as high as $100,000, a stand-alone policy can give you the freedom of choice. With affordable monthly costs, a stand- alone policy offers a tremendous amount of flexibility depending upon your preferences and needs.


What To Look For Before Purchasing

Curious what you need to consider before selecting a policy? If so, you’ve come to the right place.


Seek Flexibility

One of the most important things that you can do when you’re dealing with a life insurance policy is to seek flexibility. Who knows what will happen 5 years from now, 10 years from now, or even 50 years down the road. The only guarantee is change. Be sure to select a life insurance policy for your child that offers flexibility.


Go Bigger than Smaller

As noted earlier, the longer you wait to invest in life insurance for your children, the more expensive it is going to be. Opting for more coverage than you need can actually save you in the long run. After all, it is far more expensive to add on additional coverage when you need it. Be prepared.


Understand Your Intent

Why are you purchasing life insurance? While you probably don’t have a single answer to this question, it is something to consider. Determine how you are going to fund the account. Are you looking to pay your monthly premium out of pocket or out of existing assets? When you know what you’re looking for from the get-go, obtaining the right policy becomes a far easier and smoother process.


The Bottom Line

Although it is something that we hope never happens, we want you to be prepared. In the event that something does happen to your child, we want you to be able to focus on healing rather than finances. By obtaining at least some coverage, you are protecting you and your family against dire consequences in the event that the unexpected occurs.

Note: featured image via Guilford

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