Many insurance companies offer child life insurance to help parents with burial expenses in the event of their child’s death. It is wise to consider the advantages and disadvantages of child life insurance before purchasing a policy.
What is Child Life Insurance?
Child life insurance is an insurance policy that would pay the child’s beneficiary, usually the child’s parents, a specific amount of money in the event of the child’s death. The money can pay for any funeral or medical expenses, or it can be donated to a charity in your child’s name.
Many companies also offer insurance for children as a rider to their parent’s life insurance policy. The amount of the rider is usually $10,000 to $20,000.
Who needs Child Life Insurance?
Historically, life insurance is vital for a person with family members who rely on them for financial support. Most financial professionals agree that child life insurance is not as important as adult life insurance since the child does not earn an income, and according to statistics, the vast majority of children do not die before age 18.
What are the advantages of Child Life Insurance?
The advantages of child life insurance include:
- Child life insurance premiums are very affordable.
- Most insurance companies guarantee continuation of coverage through adulthood.
- Funeral costs and/or medical bills would be paid in the event of your child’s death.
- Child life insurance can be converted to adult life insurance at age 21.
What are the disadvantages of Child Life Insurance?
The disadvantages of child life insurance include:
- You are unlikely to need child life insurance.
- Most young adults can get life insurance coverage later.
- Child life insurance might be unaffordable for a young family.
- The insurance company might require that your child have a medical exam.
How do I choose a Child Life Insurance policy?
The two common types of child life insurance are term life insurance and whole life insurance. Factors like your child’s age, your income, investments, savings, and life circumstances will determine which type of policy might be best for your family.
Term Life Insurance
This policy is the simplest and most affordable. If you choose a term policy, you will pay a yearly premium for a fixed term of usually 20 to 30 years. If your child dies during that that term, you will receive the full amount of coverage.
Whole Life Insurance
Whole life insurance is more expensive and complicated than term life insurance. It is a permanent plan that provides lifetime coverage for your child rather than a limited term. The parent is the policy holder until the child becomes an adult, at which point the child becomes the policy holder. A whole life insurance policy has a tax deferred cash value that grows as the insurance company invests part of your premium.
Where should I purchase Child Life Insurance?
Look for a company with a good reputation that has a high financial strength rating. You can contact your state’s insurance department to see if a specific company and agent are licensed by the state.
Contact your life insurance company to get information about child life insurance or child riders. Ask your family and friends for recommendations. Compare quotes on the Internet. Contact your employer to see if child life insurance is offered as an employee benefit.
Your Next Steps:
- Talk to friends and family about their child life insurance policy.
Compiled using information from the following sources:
Zander Insurance Group, http://www.zanderins.com/default.aspx
Gerber Life Insurance Company, http://www.gerberlife.com