Many people wonder if life insurance is worth it for children. The answer to this question will vary depending on the individual situation of each person, but there are many reasons why life insurance for children can be a good investment in the future. In this blog post, we go over some key points about life insurance and whether or not you should invest in it for your children.
Contents
What is life insurance?
Life insurance is a contract between an individual and an insurer. The life insured pays the premiums for a sum of money that will be paid out if death occurs on one or more occasions as specified in advance. The type of coverage you choose, whether whole life or term life, determines when payments are made to the beneficiary(ies) and what expenses are covered. In addition, life insurance can provide temporary income from a cash value account or permanent lump-sum payments to designated beneficiaries.
Is life insurance worth it for children?
The answer is, “It depends.” Insurance can be useful if a child has significant assets that would need to be liquidated following an untimely death or in case of special needs care. However, the decision on whether you should buy life insurance for children will depend on your situation. Here are some factors to consider:
- The ages of your children. Younger children will typically require less life insurance coverage than older ones.
- Whether or not you have other sources of income than just from work. If this is the case, then purchasing life insurance for children may not be necessary.
- The medical history of your child. Your child’s likelihood to suffer a life-threatening illness or accident will affect whether you feel it’s necessary for them to have life insurance coverage as well.
- Your household income and assets. If you’re financially stable, then the purchase of life insurance may not be worth it for your children.
- The life insurance provider. The type of life insurance you choose will have a big impact on whether or not it’s worth it for your children to get coverage too.
Cost of buying a child’s policy
The cost of life insurance for children depends on the plan you purchase, as well as your child’s age and health. You’ll generally be asked to provide information about whether they’re healthy or not when applying for life insurance coverage for. For example, if it turns out that they have chronic medical conditions due to their obesity like asthma, then this might cause you to experience higher premiums.
A healthy three-year-old child would be able to purchase a life insurance policy for as low as $25 per month, whereas an unhealthy one might cost closer to $100 or more per month. Other factors that can affect the price of a life insurance policy include where the person lives and their age, among other factors.
How to buy life insurance for children?
To purchase life insurance for your children, you’ll need to find an insurance company that offers life insurance for children along with other types of life insurance.
Some things you might want to consider before purchasing a policy such as the cost, whether your child has any pre-existing conditions and how long you would like the policy to be in effect (i.e., while he or she is still a child, until they reach the age of 18 or for their lifetime).
If you have any questions about life insurance policies in general and how to purchase one that is best suited for your specific needs, contact a financial adviser like Dundas Life who specializes in helping people find the right policy.