Planning for the Future: Life Insurance for Children

Nothing is more important than family. As a parent or grandparent, you want to take care of your loved ones in any situation. Life insurance for children is one tool that can help with that. It offers some peace of mind for you, a safety net for your loved ones, and can be a building block to your loved one’s best life!

What is Life Insurance for Children?
Life insurance for children is a way for you to help protect your loved ones at all stages of their life, no matter what kind of curve ball life throws. It can be purchased by a parent or grandparent in the name of their child or grandchild, and gives the gift of lifelong insurance protection.

You can buy life insurance for children from the time they turn 14 days old until they turn 17. Plans help take care of expenses in the case of your loved one’s death, but they can also provide other benefits. For instance, your loved one can cash it in after their 18-21 birthday, depending on the insurance plan, and use the cash value for something important to them, like to help pay for a part of their dream wedding.

Life insurance for children policies are typically whole life insurance policies. They build cash value over time and guarantee that your premium will not increase.

What are the benefits of life insurance for children?

• Helps cover any expenses in the event of your loved one’s death
  If tragedy occurs, the policy helps cover funeral expenses and medical bills. Parents can even use the funds to take off work and take care of their family during this difficult time.

• Ensures your loved one has some coverage later in life – no matter their health
  No one knows what the future brings, and if your child or grandchild develops a medical problem, life insurance coverage may be harder to get later. When you get children’s whole life insurance before any medical problems appear, you ensure your loved ones have some coverage, before they would no longer qualify. Life insurance for children also allows them to qualify to add on more insurance later in life despite their risks. Keep in mind: additional coverage generally relates to the amount of child life insurance you already purchased and may not be completely adequate later in life.

• It’s a resource your love one can borrow against to help fund a dream
  Life insurance for children can build cash value over a period of time. The longer you have the plan, the more you have to borrow against. Your loved one can dip into this to pay for part of the cost of a wedding or college tuition. However, borrowing from a permanent life insurance policy will reduce the death benefit from the life insurance portion of the policy.

• Make a lasting gift
  When you purchase child life insurance for a loved one, you leave a lasting gift. The gift is some peace of mind in the event of a death and a possible leg up on your loved one’s goals if they use the cash value.

Considerations

There are important things to consider when choosing child life insurance. These factors will help you figure out if child life insurance is right for you.

• If you don’t already have adequate life insurance coverage, purchasing a whole life policy for your child or grandchild may not be the best option. Just remember: Child life insurance isn’t meant to replace your other insurance. It will not give the same type of coverage.
• Using the plan for its cash value has impacts. Before you use the plan for its cash value, you need to make sure it is the right decision for you. Using the cash value can affect your plan in several ways: It can reduce the value of your plan, have tax-implications, and could possibly cause your premiums to increase.
• Child life insurance doesn’t gather interest. If building interest over time is a concern, you can invest other ways. Be sure to factor this in when deciding what is best for your loved one.

Determine your life insurance needs or talk with an agent/producer to decide if life insurance for children is right for your family.

Consult with a professional tax and/or legal advisor before taking any action that may have tax or legal consequences.

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