Child Life Insurance
Many insurance companies offer child life insurance to help parents with burial expenses in the event of their child’s death. Every family should 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. This money could be used to pay for funeral costs, medical bills or donated to charity in your child’s name.
Many companies also offer insurance for children as a rider to their parent’s life insurance policy. This rider is usually $10,000 to $20,000 in coverage to be used for burial expenses in the event of the child’s death.
Who needs Child Life Insurance?
Historically, life insurance is vital for a person whose family members rely on them for financial support. Most financial professionals agree that child life insurance is not as important as adult life insurance because a child does not earn an income. Statistics show that the majority of children do not die before age 18.
What are the advantages of Child Life Insurance?
There are a number of advantages that should be considered when deciding whether to purchase life insurance for your child. Here are some of the advantages:
- Child life insurance premiums are very affordable.
- Most insurance companies guarantee 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?
There are a number of disadvantages that should be considered when deciding whether to purchase life insurance for your child. Here are some of the disadvantages:
- Your child is unlikely to use child life insurance.
- Most young adults can get life insurance coverage later.
- The expense of a child life insurance policy may be too much for a young family.
- Your child may need a medical exam.
How do I choose a Child Life Insurance policy?
There are two common types of child life insurance: term life insurance and whole life insurance. Factors like your child’s age, your income, investments, savings, and life situation will help you determine which type of policy is best for your family.
- Term Life Insurance
This policy is the simplest and most affordable option for most families with small children. You pay a yearly premium for a fixed term, usually 20 to 30 years. If your child dies within that that term, you will receive the full amount of coverage.
- Whole Life Insurance
Whole life insurance is more costly and complex than term life insurance. This policy is a permanent plan that covers your child for their lifetime rather than a term. The parent is the policy holder until the child is an adult, at which point the child becomes the policy holder. A whole life insurance policy also offers 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 that is reputable and has a strong financial strength rating. You should also contact your state insurance department to make sure the company and agent are licensed by the state.
Contact your life insurance company to inquire about child life insurance or child riders. Ask family and friends for referrals. Compare quotes on the Internet. Talk to your employer to see if child life insurance is offered as an employee benefit.
Your Next Steps:
- Find Child Life Insurance in your area.
- Read Life Insurance.
- 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
