Why buy life insurance for children?
Life insurance is an interesting purchase because, even while you’re still alive, it’s not always something you need to have at any one stage in life. With property insurance – i.e., auto, home, condo, etc., you should be purchasing insurance so long as you own any of these assets. Life insurance is only necessary at certain stages of life, and even then it depends on who you are, what your needs are, your dependents’ needs, your budget situation, etc. So, what about children? Why are some people purchasing life insurance for children, and what are its benefits?
There are pros and condos to purchasing life insurance for individuals under 18. Yes, life insurance can provide a safety net for your loved ones, but how does it work with children? Well, it comes down to protecting your children’s’ insurability. Here’s what that means and why you might want to consider.
Because life insurance protects both you and your children
Like life insurance for an adult, a life insurance policy purchased for a minor is a contract between the insured and the insurance company. As with any policy, you’ll pay premiums (either monthly or annually) to ensure that the policy remains intact and, that if the insured dies during the policy period, a death benefit is paid out.
However, with someone who is under 18, who receives the payout if the insured dies? It’s a bit of a morbid subject, granted, but it’s important to be aware of. If the insured did pass during the policy period, the policyholder – i.e. the legal guardian, parent, or grandparent can be elected as the “beneficiary,” aka the one that receives the policy payout.
The only life insurance policies available for children are typically “whole life” insurance polices, which offer lifelong coverage so long as premiums continue to be paid. The one great thing about purchasing life insurance for a child is that premiums are guaranteed and likely will not increase with time. In addition, with a whole life insurance policy, a base amount of that premium goes towards accumulating cash value which can then be accessed while the insured is alive for any reason.
Term policies cannot be purchased for children. You can, however, purchase a term life insurance policy for yourself and add a rider that would cover all of your children/dependents until they reach a certain age, at what point you can elect to convert their coverage to a permanent alternative.
How is purchasing life insurance for children different than for adults?
Purchasing life insurance for children is just as easy and simple a process as purchasing life insurance for an adult – and you can do both quickly through a broker like Panda7! – if not even easier, since children won’t have to undergo the classic life insurance medical exam. You’ll still have to fill out an application, but it does cut down the process significantly. You are able to purchase a life insurance policy for a child who is 17 or younger (although the caps may be lower for different insurance companies, like 14 or 16.)
As the owner of your child or dependent’s policy, i.e., the policyholder, you can choose to transfer ownership to your child at any point. Typically, policies will be transferred from parents to children once their kids become full adults and can then assume premium payments.
So, what’s the biggest benefit in insuring a child? Premiums are far cheaper the younger the insured is when the policy is purchased. This is especially beneficial for more expensive policies – i.e., whole life/universal policies, where you can lock in at the time of purchase and the premiums will be guaranteed throughout the life of the policy.
You can also choose the amount of coverage that is most fitting to your circumstances. How much you pay will be directly impacted by how much coverage you purchase. An insurer may also offer to pay off a policy within a certain number of years as opposed to throughout the entire life of the child. Some insurance companies offer 10- or 20-year payment options for children’s whole life policies. If the payment period is shorter, the premium will be higher, but you can consider this option if you want to turn over a policy that has already been paid off to your child.
Purchasing life insurance for your child with Panda7
Purchasing life insurance is no small decision, which is why Panda7’s friendly and experienced brokers are here to help you out and will shop for you for the best life insurance policy. We get you quotes, compare policies, compare options, and serve as your no. 1 resource finding insurance rates that work for you. With Panda7, you can save time, save money, and get immediate coverage for your child, if that’s what you choose. We’re also confident that we can discuss with you one-on-one about the benefits of purchasing life insurance for a child, and if that is best for your existing budget and situation.
Our online resources are available 24/7, allowing you to gain immediate access to the lowest quotes from top-rated life insurance companies throughout Quebec. We save you time, hassle, and ultimately get you the peace-of-mind that you and your family deserve above all else.
