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All we want is for our children to live long, happy, and healthy lives. Sometimes, however, the horrible and unfathomable does happen, and in those situations, dealing with financial worry while processing grief can be an unmanageable combination.
That’s why we’re here to tell you that life insurance isn’t just for adults. Planning for tragedy feels morbid, but just as a flight attendant makes you locate your nearest exit ahead of time in case of emergency, understanding how child life insurance works is a necessary precaution that will protect your family’s financial security.
So let’s dive into why you may want to explore child life insurance, along with the benefits it provides.
First, let’s get this out of the way: there is no legal requirement to get child life insurance. It’s totally up to you. But if you do choose to purchase life insurance for your child, you can choose between term life and whole life policies, just as you would for yourself.
Term life insurance provides coverage for a fixed period, with no cash value and no additional investment benefits — which is why it tends to be the more affordable option. Whole life insurance offers lifelong protection and potentially accumulates cash value over time, making it an investment vehicle in addition to a form of protection.
That said, you don’t have to purchase an entirely new policy for your child; you could also explore a child rider, which functions as an add-on to your own life insurance policy. Riders can be useful because they are typically inexpensive (it’s usually $5 to $7 a month per $1,000 of coverage you add), they do not require medical examinations, and they can cover multiple children. Once a child reaches a certain age, however, the rider expires — though it is sometimes possible to convert it to a separate, standalone policy should you so choose.
Having life insurance for your child can provide financial security in the event of a tragedy. An insurance policy for your child can also contribute to their financial security in the future, among other benefits — which we’ll now dive into!
As a child ages, they may deal with health conditions that limit their ability to secure their own life insurance policy as an adult. If, however, they have life insurance from the time they're a child, there’s no medical exam for later coverage additions, and underwriting requirements become much simpler. And because whole life insurance policies offer protection for their entire life, they'll have insurance no matter what their medical future holds.
Like car insurance, life insurance providers determine rates based on coverage amount and risk. Child life insurance policies are priced much lower because the insurance company’s risk is lower, so it pays to start policies for your children at a young age.
These lower premium rates are then locked in for the entirety of the policy — even for higher insurance coverage amounts. And here’s a pro tip: Oftentimes you can still lock in lower rates even if you purchase a policy when your child is a teenager.
But of course, we have to add an important caveat: Rates will vary depending on whether you get a whole life or term life policy for your child, how much coverage you opt for, and which insurance company you choose. That’s why we recommend shopping around and getting quotes from at least three providers.
Besides providing financial security to beneficiaries, life insurance can also offer investment opportunities. As some policies build cash value, policyholders can save money while earning a return on their investments. You might also be able to access policy loans if needed. Life insurance, as such, can be both a protective and proactive tool.
All life insurance plans are designed to pay out the coverage amount upon the policyholder’s death, and a child life insurance policy is no different. If the unthinkable happens and your child passes away, you’ll have the financial means to cover funeral expenses without resorting to credit cards or draining your savings account. Depending on the policy, you may be able to cover other expenses, such as bills and missed wages, should you need.
Purchasing life insurance for your child can help to protect their financial future. You can ensure life-long coverage, lock in low premiums, and provide your family with an investment opportunity.
If you need help choosing a policy, look no further than Marble, where you can get insurance quotes from multiple providers, shop coverage options, and earn rewards just for having insurance. Sign up today!
