Some parents may feel coerced into getting a life insurance policy for their children by shrewd insurance salesmen. Others may feel obligated to do so when they get one for themselves. But, the question – life insurance for children: is it a need? – will depend on the financial circumstances of the parents and what benefits the child will accrue by having an insurance policy in his or her name. Just like an adult insurance policy, there are two main types of life insurance policies that can be taken for children: * Whole life insurance * Term life insurance.
A children’s life insurance policy can be taken for a child who has a genetic medical condition be able to have insurance when he or she is older. Most insurance companies will try and sell insurance policies to parents claiming that a child’s life insurance policy is a must. Actually, this really depends on the type of policy, so do not get pressurized into getting one for the sake of doing so. The main reason why parents must consider getting a life insurance policy is if there will be future insurability problems.
This will result in the case of a family history of medical conditions like heart disease or diabetes, which a child can inherit. In such a case, getting life insurance policy when they are earning could be a problem or work out too expensive. On the other hand, if a parent has already taken an insurance policy for such a child, then continuing it in adulthood will be easier. In such cases, the cheapest form of insurance will be a twenty year term life insurance with the option of renewing it to a whole life policy at the end of the term.
Parents find it very difficult to use a benchmark to calculate how much the amount of money their child will need by way of insurance. For such parents, their salary level can be taken as benchmark. If the parents want their child to continue with the policy even after 18, they should take a whole life policy rather than a term life policy as the later is neither useful nor a profitable one. It is because the term life policy will be good for nothing after its expiry particularly for the children who outlive the term life policy taken by their parents.
Funeral expenses or outstanding medical bills can be met with term life insurance amounts. Some term insurance policies pay money if the child gets disabled during the term. Term life will come handy to repay outstanding debts or for therapy for parents shocked by the loss of their child though borrowing against the amount is not allowed. But most of the parents are sentimental enough not to think of taking the term life policy as they can’t even imagine the loss of their beloved one.
Whole life policy is very much useful for those whose family is having genetic disorders. For the children with precarious medical condition that could manifest in the later stage of their life, whole life policy is an ideal choice. The money that comes from can be used for medical expenses and it also allows the parents to borrow against insurance which can be used for short term expenses life school fees. Most of the children will be the beneficiaries on their parent’s insurance policies. Hence most of the financial experts believe that insurance to children is not necessary.
Instead of paying insurance premiums, parents can open savings account for children. There is no much difference between them. The money saved can be used for their kid’s college, medical and other expenses. The kind of medical facilities we have to day and the way they are improving, most people remain insurable even after 80. In general, the children will not become uninsurable. So parents don’t have to worry too much about taking insurance policy for their kids.
Mutual funds or annuities are also better alternatives as parents can get good amount of money which can be used for all important expenses. This will be helpful to parents in spending money for their child’s every need. Don’t do some just for the reason that somebody is doing it. This is what experts say. Do what you really need to do. Consider your family conditions and go for insurance if it is really necessary.
Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on life insurance term life insurance and no medical exam term life insurance, visit his site today.
