- Do I Need Life Insurance for my Child?
- Why Parents get Life Insurance for Children?
- What is a Rider?
- How Much to spend on Life Insurance Child Option?
Do I Need Life Insurance for my Child?
There are a lot of different scenarios where you might get a definitive yes if you were to ask yourself, is my child someone who needs life insurance?
Every time you turn on the TV, you see some sort of life insurance child-related advertisement, and you end up thinking, is my child also someone who needs life insurance? Being a parent, a lot of us might end up answering that question with a definitive yes! However, seeing that you are reading this means you want to know the truth of the matter in a rational sense, and we are going to provide you with precisely that. So keep reading to find out all you need to know on this matter.
Why Parents get Life Insurance for Children?
We can’t deny the fact that marketing campaigns are meant to ensure the sale of their product, and that has a significant impact on your decisions. Here are a few of the things that you will often see these ads target when you ask them why they buy insurance for their children.
- Education savings plan: from all the advertisements that you will see about life insurance for children, a commonly occurring feature of these ads is that you can plan for the college fees of your child. While that may sound like a great idea, it is actually quite far from the truth! The whole point of insurance is to get a big return at the end and using insurance to pay college fees means you are diminishing that return. In addition to that, every time you take the money out, you will also need to pay a fee to the insurance company for that withdrawal. There is no way such a step is a good idea!
- More life insurance: it is a pretty well-established truth that the earlier you buy insurance, the lower your premium rates will be. However, a lot of people get insurance for their children thinking that doing so would get them the best possible insurance rates, even if they develop some sort of disease or other issues. However, there is good news already awaiting you, also if you skip on early insurance. The fact is that all young people are easily able to grab pretty good rates anyway, so having earlier insurance has minimal impact. Also, there is only a limited amount of the previous benefit (usually too small to make a difference) that your child can add to their insurance as an adult. This amount is quite meagre in terms of providing them and their families with a significant benefit at the time of maturity.
- Funeral arrangements: yes, funeral arrangements are a big expense and having money saved for it in advance can really make a big difference for some people. However, the chance that you will actually require such an expense is quite slim, so some people choose not to get insurance based on this reason alone. And often, the expense is not so large that a typical savings account deposit can’t handle it. It is much more prudent to simply keep that money in a bank account so that you don't have to pay a withdrawal fee every time you end up facing some other requirement. For example, your child's tonsils may need to be taken out, so having a little money saved for that could really help you out, considering that the odds of that or other similar incidents happening are usually a lot higher.
What is a Rider?
While in most cases, one may think twice before they decide to buy an insurance policy for kids, it does not mean that it is not a genuine requirement for some people. Additionally, you can still add another layer of protection for your children through your own whole life policy, which might cost you less than buying a completely separate policy and would also be more manageable. This method is known as an insurance rider. It allows the policyholder to add custom perks to their policy, things that may not be offered by the insurance company as default. While this is not a full-fledged life insurance child option, it does add sufficient value in almost all cases to benefit your child. There are a lot of different ways that parents can secure benefits for their children, depending on their needs.
For parents who are facing a terminal illness and are unable to provide a running income for their children, they can have the option of “accelerated death benefit” attached to your whole life insurance. This type of benefit allows the withdrawal of funds from the policy so that the children can use them while the parent is still alive. They can use this policy to do anything they want, typically the options being to either improve their life, or pay medical bills, or even to pay for the final expenses such as funeral etc.
While that all may sound like a great idea, it is still important to realize that riders are like adding bells and whistles to your car. They may add to the appeal, but they cost extra money. Research shows that riders are often provided for situations that are bound to occur quite rarely.
While all these things may indicate that you should leave your children uninsured and simply get yourself the best possible whole life insurance policy, it does not mean you should completely ignore the life insurance child option in every case. There are a lot of different scenarios where you might get a definitive yes if you were to ask yourself, is my child someone who needs life insurance? Here are the cases where having a life insurance policy for your kids could be of benefit to you or the kids themselves.
- As a gift: Of all the ways that one could use to justify spending money on a child's life insurance, this is probably the most feasible and suitable. If you have enough money to spend and you want a prudent investment in your child, then gifting a term life insurance is not such a bad idea, especially since it costs less too. This is a situation where buying a life insurance child option would seem like a much better investment than spending money on frivolous things and basically indulging them with unnecessary expenses. It might also teach them the value of money.
- Funding a charity: for a lot of parents, the event of their child's death, especially through unnatural means, can be quite moving. They are often inspired to raise awareness for that particular problem and perhaps create a coordinated effort to bring change. Having a benefit that can fund such a situation can be quite useful, and in doing so, their child's name may be attached to the cause. Having your child remembered like that can be a significant source of peace for the parents.
- Bereavement in unnatural death: while the death of a child can be unbearable for any parent, unnatural deaths can make the event a lot more traumatic. If you live in a place where there is a chance of such an event happening, even a term life insurance policy can help you a lot in terms of pulling yourself through. Most employers don’t provide long term paid holidays in the event of death and having a financial source to sustain yourself while you try to overcome the grief can be very useful. For a lot of parents, getting counselling is a solution during this situation, and an insurance policy benefit can help pay for that as well.
How Much to spend on Life Insurance Child Option?
Typically, a very basic policy should be more than enough to cover for your child. To provide for basic needs only, it is a good option to opt for a policy rider that can provide a decent increment to your benefit against a small increase in your premium payment.
However, if you want to opt for a full policy, then you can get a plan that costs $30-$40 monthly payment against a benefit of $50,000. This is clearly the more expensive option of the two, but it gives your child their own life insurance coverage.
The bottom line is that the biggest reason for buying an insurance policy of your child is to make sure they are guaranteed to get insurance once they grow up. With all other possibilities having a rare chance of occurring, making your child ready for their own insurance is the biggest favor you can do for them!
Getting any life insurance from a traditional route can be a big hassle. With counselling from insurance providers and dealing with agents and allocating time, things can get quite frustrating. Thanks to online insurance companies such as Emma life insurance, you can easily purchase any policy you want for your child in just a few clicks. The whole process is completely online, and you do not have to meet anyone from the company physically in order to purchase your policy. It is truly the difference that the insurance policy needs to provide some time benefit in the current fast-moving world!