brier April 12, 2013 No Comments

One significantly overlooked and major decision new and expectant parent’s face is whether or not to get life insurance for their children.  The next question is what kind to get and how large of a policy to choose.  Most people get very overwhelmed by the thought that life insurance is for final expenses, something no parent wants to think about when it comes to their child.  This is not the main reason to get a life insurance policy; there are many reasons why it is beneficial to start them with one from birth or at a very young age.

According to research from Council of Life Insurers, life insurance for children is not a popular purchase.  They report that only 15 percent of people under the age of 18 have life insurance.  This percentage has remained the same for over a decade.  The average amount of coverage for children is small, normally around $5,000 added to the parents’ policy to cover burial costs.

Life insurance for children should be looked at as an investment, not just a way to cover final expenses.  It is simply another way of planning for their future.  By starting a policy when they are at such a young age can be valuable on many levels.  If over the course of the child’s life they are diagnosed with a problem and do no already have life insurance it will be very hard to get and very costly.  By having it early, they will already be insured and this issue can be avoided completely.

Some of the types to look into are:

  • Permanent/Whole Life. Permanent life insurance provides a lifetime of coverage.   By starting this off from birth or at a very young age the savings will be tremendous and you will be able to provide your child with a much larger amount of coverage for a very low amount.  Permanent policies build tax deferred value over time and you could eventually take out a loan on the cash value to help with future expenses like college, weddings or other things that may come up.
  • Child Rider/Group Life.  This option allows you to add children under the age of 17 to your current policy.  The coverage will last until age 25.  At that time most allow for it to be converted into a regular policy.  With most companies this will cover all of your children at one rate and will stay the same as your family grows.   This is an affordable choice for those who  may not want to invest in the permanent/whole life option.
  • Endowment Insurance.  This is a life insurance that is for a set amount which is payable to the insured individual at the end of a certain time period or to an assigned beneficiary immediately upon on the death of the insured. 

We encourage all parents to look into life insurance options for their children.  The long term benefits for them and the savings are tremendous and should not be overlooked.  Maker sure to do all of the proper research and choose the plan that best suits your needs and future plans.