All About Life Insurance For Little Ones
When we get married, a lot of things change, including our priorities and goals. So much more, when we conceive and give birth to a new life, will soon be under our care. As parents, we want our little ones to grow up happy and healthy with a secure future. Is one way of doing that is by giving them a life insurance policy? With insurance as a broader topic, what are the things you need to know?
Let’s take a closer look at life insurance facts for our little ones and check which one suits you. Let us use online insurance comparison sites. If you own a vehicle, even your little one, needs car insurance, too.
Why Buy Life Insurance for Your Child?
Suppose there is one thing that parents don’t want to think about is outliving their children. However, that is an unavoidable reality as kids are more vulnerable to acquiring diseases and are more prone to meeting accidents than adults. Thereby, obtaining your offspring, a life insurance policy is deemed necessary. We lined up below other benefits if you buy a policy for your little.
- Protecting your income: When your child gets seriously ill or disabled thru an accident or, worse, dies, their life insurance will pay for their prohibitively expensive treatment, rehabilitation, and final expenses. With that, as a parent, you can focus on taking care of your child and keep your income intact for other family expenses.
- Better insurability: As they grow old, so long as premiums are paid, their life insurance will keep them protected with better insurability clauses like higher coverage. You, as parents, can teach them that part of financial literacy.
- Opportunity to save or invest: Depending on the type of insurance you will get for your child, you will have a chance to make your money grow more. For example, if you opt for a whole life insurance policy, you may earn guaranteed cash value from dividends and accrue as your child grows.
You may also opt for a unit-linked insurance policy, where a portion of your premium goes to investment managed by experts so that by a certain age, you may withdraw and use it for your child’s significant expenses.
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Which type of life insurance?
As the policy owner, choosing which type of insurance to get for your child depends on your goal. Your child is only the insured. Here are the types you may get according to your financial plans.
If you aim to give guaranteed insurance benefits for your child’s treatment needs if they get critically ill or final expenses, go for a whole life. As the name suggests, it will cover your child from the day you sign onto a policy until death. You may also opt to transfer ownership and let your child continue premium payment when they reach legal age, only that this is more expensive than other types.
Variable Unit-Linked (VUL)
If you wish to slowly prepare for your child’s significant milestones or education with investment type. With this type, part of your premiums goes to insurance coverage costs, and part goes to buying units in money markets to make your money grow for some time, say until your child reaches 18 for his educational fund.
If you are low on budget but determined to secure your child even with death benefit alone, go for a term as the premium will most likely matter on amount and years of coverage only. Should budget permits, you can renew or add riders for better coverage.
Insurance premiums for children
Even for children, insurance premiums vary on several factors. However, young as they are, they are more vulnerable to sickness and are more prone to accidents, thus riskier to insure. Accordingly, you can expect that theirs will be a little more expensive.
What are the cons?
There is three obvious consequence we can think of buying a child insurance policy and there are as follows:
- It is a long term commitment.
- The coverage amounts are usually low.
- If you opt for an investment type, the interest returns are usually low.
Insurance for children is more complicated than that of adults, thus knowing your financial goals and getting the right advice will make a difference. Online comparison sites like insuranks.com make it easy for parents to get insurance quotes from the best child insurers and apply for them simultaneously.
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