Life Insurance for Children: Do You Need It For Your Little One?

Most parents are overwhelmed with joy after the birth of their children. And while this is the best feeling ever, thinking about your child’s death can be so unbearable. Even so, you’d still love to secure your child’s life insurance, and you’re skeptical whether it’s a good idea or not. 

Life insurance is for protection, but it’s not the ultimate option for your loved ones. Not to worry, though, we’ll explain all our choices of life insurance for children to help you make a rational decision. Stay tuned!

How Life Insurance for Children Works

Most life insurance for children is based on whole life policies. While these are permanent policies, you’ll be prompted to open a savings account, also known as cash value, so that it grows along with your child.  

A good example is the Gerber Grow-Up Plan policy from Gerber Life Insurance. However, you can still buy a child’s whole life coverage from any renowned insurance companies and later transfer the ownership once the child is fully grown.

Term life insurance is another type of life insurance, which remains relevant for a couple of years. Sadly, you can’t purchase a stand-alone term life policy, but you can pay an additional amount to enhance your coverage according to its terms and conditions. Therefore, your child’s coverage will expire at the end of the period or upon becoming an adult. 

Why Should You Buy Life Insurance for Children?

Getting life coverage for your children is a prerequisite. There are no rules set aside that you should opt for life coverage. So depending on what you feel is best for your child, you can either decide to have one or not.

That said, below are some of the reasons why you should purchase life insurance for children.

1. It provides a savings vehicle

The savings element of a whole life coverage policy, called cash value, grows gradually over a couple of years. With these savings, the policy custodian can borrow at the expense of the cash value or even let go of the monetary policy. The cash value isn’t taxed as income unless you surrender the policy or withdraw money. Fortunately, you’ll be taxed for withdrawal only when it exceeds the premium payments.

This cash can be used for any expenses, including college fees. When you purchase a permanent life insurance policy, rest assured of a reasonable percentage return on the cash value. This return compares well with other traditional savings vehicles like CDs. And as Marvin Feldman, the CEO of Life Happens, clearly puts it – “It isn’t designed to be a primary savings and investment tool. It’s one of the tools for parents and grandparents to consider.” 

2. Savings for college or other reasons

The juvenile life coverage includes a savings component, often referred to as cash value, which increases every time you make payment. The cash value can be used to cater for college expenses in the future. 

Your cash value is enhanced every time you process a payment. Similarly, your savings account generates interest each month, enhancing its growth even more. The best of all is that there are no growth limits for the savings account.

Additionally, there are no specific periods to make withdrawals – you and your dependents can withdraw from cash value any time of the year. Let’s say your child needs money for college fees or any other expense; you can opt for the cash value to help you with that.

3. Funeral costs

Let’s face it: This is one of the primary reasons why most parents and grandparents resought a child’s life insurance policy.

Although there are zero chances of a child dying, it would be best to purchase a child’s life insurance policy to provide financial relief should any of your children die. After all, funeral expenses aren’t cheap either. 

4. Guaranteed insurability later in life

A whole life insurance policy tends to be expensive, but it’s a good bet when you want your children to have guaranteed insurability in the future.

Typically, whole life insurance policies will allow the insured child to shop for a certain amount of coverage without asking for insurability proof. This means that they can access coverage regardless of their health or lifestyle.

For example, if your child develops a critical illness in his or her early 20’s, he should be able to purchase extra coverage with the coverage entitled to him despite the illness.

5 Best Life Insurance Providers for Children

1. Mutual of Omaha

Mutual of Omaha boasts for its ability to provide a more straightforward and convenient way of purchasing life insurance for children. This agency offers coverage policy for children as young as a month old with benefits of up to $50,000. And because it’s life insurance for senior adults, no medical examination or tests are required to affect your child’s registration – just a simple medical questionnaire.

Also, converting your child’s insurance policy to cash value life coverage is dead simple. Reliability, affordability, and easy to integrate platforms are top-grade features that make Mutual of Omaha stand out.

2. Gerber Life College Plan

Paying for college expenses can be overwhelming even for parents who have been saving since their child’s birth. The Gerber Life College Plan insurance comes in handy to help fund your child’s college education. Unlike other college savings accounts whose plans keep fluctuating depending on the stock market, Gerber Life Plans are an exception.

This makes it an investment worth saving for. What’s more? You’re guaranteed payouts from $10,000 to $150,000 at the end of the policy when your premiums are up to date. That said, Gerber Life College plans are flexible and can be used for any college-related expenses.

3. Globe Life

Globe Life takes pride as the best insurance company offering exceptional baby life coverage plans. The premium payments are affordable and let you buy coverage for children up to 24, similar to purchasing coverage for an adult if your child is 18+ of age. 

With Globe Life, insuring your children and other dependents is dead simple. All you need to do is select your benefit from $5,000 all through $30,000 and get a $1 premium for the first payment. Also, signing up for online coverage is a no brainer. Your coverage will begin instantly upon registering for their services.

The best of all is that you don’t need to fill out any medical questionnaire or undergo a medical examination. With a clearer sign-up and hassle-free coverage, Global Life guarantees affordable coverage plans for children up to age 24.

4. State Farm

If you’re planning on getting a single plan to insure your entire family, State Farm is the place. State Farm’s Children’s Term Rider covers up to $20,000 of life coverage for each child. Unsurprisingly, the single rider accommodates even the unborn kids, so the cash value increases as your family grows. 

Coverage for newborns is offered once they are 15 days old and extends until your child attains 25. At this point, converting your child’s coverage to whole life policy so he or she can choose their policy is a no brainer.

5. Thrivent

If your priority in choosing an insurance policy is pricing, then Thrivent is a good bet. More precisely, consider juvenile plans that’s available from as low as $12 per month. Also, you’re guaranteed of standard premiums until your child is 70 years of age. The best of all is that Thrivent lets you purchase a lower juvenile plan until your child turns 14 years old. You can also opt for the short term life policy that lasts up to 20 years, probably when your child is ready to move out.

Frequently Asked Questions

Should I get my child life insurance?

Life insurance for children has two primary benefits, which come in handy should the worse happen. For example, if your child suffers a critical health condition or even dies, your policy will provide financial assistance. If no situation arises, rest assured of better life insurance policies when your kids become adults.

What is the youngest age you can get life insurance?

While there’s no minimum age for buying life insurance, you need to be eighteen years of age before accessing any financial contract like an insurance policy.

Is life insurance a waste of money?

A life insurance policy with no stable earnings or dependent beneficiaries can be a waste of money. However, terms and conditions may vary from agency to agency, so choose one that’s up to your needs.

Why is whole life insurance a bad investment?

Whole life coverage includes a cash value element that grows over time just like a savings account, but that doesn’t make it better than life insurance. It’s ten times more expensive than term, and most people don’t intend to insure their entire lives.

Who needs life insurance the most?

Life insurance is only useful when you have dependents. Generally, dependents can be children below eighteen or anyone relying on your financial support like aging parents, spouse, or even siblings.

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