The best life insurance plans for children

The best life insurance plans for children

It is emotionally hard and very sensitive to be exploring life insurance options for your kids. As parents, you cannot associate concepts of death benefit with your own adorable angels. It is a lot easier to talk about your own insurance and its death benefit as it usually goes down to your kids and family.

But here is an important insight…there could be a lot more to life insurance than just a death benefit. After all, we have insurance and we are also someone’s kids. Our kids today will be parents of tomorrow, they will be responsible citizens, would have financial responsibility…and thus have all the important needs for financial protection. Hence life insurance is most important with a futuristic mindset.

Child Rider Term Life insurance

This is when the parent adds his or her child or children to their policy as an additional benefit. The child is covered to the age of 18 or till early 20’s depending on whether the child is still in school. The amount limitation is very low and it is very inexpensive.

  • The face amounts on these policies are more limited, usually ranging from $5,000 to a maximum of $30,000.
  • The coverage usually ends when the insured reaches 18. (Certain companies extend the expiry date to 21 or 25 if the child is in school.)
  • One rider can cover multiple children.
  • Costs generally start at $6 a month, depending on the coverage amount and plan type.

The riders might have a privilege to transfer.

 Permanent Life Insurance

This is the most expensive solution for a child, but it also offers the most comprehensive coverage. Permanent Life Insurance solutions for children include the following.

  • Universal Life — These plans can offer level cost of insurance with an optional savings component.
  • Non Participating Whole Life Insurance These plans are fully guaranteed, have a guaranteed cash value, and can be paid up in 10, 15, or 20 years.
  • Participating Whole Life Insurance — These plans may appear to be expensive, but here is the value: these plans offer guaranteed premiums, the highest cash values and increasing death benefits. Premiums for permanent policies can range from $15 a month per child, depending on coverage amounts and plan type.

Stand-Alone Term Policy

These plans are extremely loww in costs but offer fewer benefits tha Permanent Life Insurance. Convertability or renewability option can be considered as some strengths of these plans in the long term.

  • Traditional Term Insurance — A limited number of companies offer Traditional Term Insurance for children. The cost of these policies remains level for the initial term and increases as the insured ages.
  • Term Insurance with Built-in Critical Illness Coverage — Assumption Life and Industrial Alliance recently introduced Term policies for children with built-in Critical Illness benefits.

 

Created by: Aman Kapur

 

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