Life Insurance for Children

Life Insurance for Children. Do not overpay for life cover for children: compare the whole market and save up to 40% on life insurance.

This type of life insurance is one that financially provides during the unfortunate loss of a child. Since childhood mortality is very unlikely, parents usually obtain insurance for children for different reasons such as long-term benefits and future use. Many of these policies have college savings benefits but they are usually just bonuses and not the main feature of the insurance package.

What are the benefits of this insurance?

As with other life insurances, there is the coverage for funeral costs. Funeral costs can cost up to thousands of pounds and could put a strain on the family finances. This can easily mean loans but the death of the child also means one less dependent on the family. In the long run, the funeral costs could return at loss of dependent. Pay-outs are also available. This is where child insurance becomes a little awry. Childhood mortality is very low and in several places around the world, child insurance is grounds for murder because of the lump sum pay-outs made available to parents.

This kind of insurance could also be beneficial in the event of critical illnesses. These conditions usually also trigger a pay-out of about £25,000. This could help secure finances for the child for a few more years.

Another more important benefit is when the child develops a chronic condition, there will be no need to acquire new policies and the individual would still be under similar insurance. This is a very significant benefit because if a kid develops, for example, diabetes as a grown up, he wouldn’t have to reapply for a new policy and pay higher premiums. Insurance for diabetics usually cost at least 2x of a non-diabetic policy. This is a significant amount of savings considered in the long run.

Will this help me save for college?

Yes and no. Savings for college is one of the purposes that salespeople often market child life insurance policies. Since it is insurance, you are required to pay premiums at specific deadlines and at the end of the term, there is an option to withdraw accumulated money.

Accumulated money, however, is already laden with fees such as commission that are imposed by the insurance structure of the provider. Getting this type of life insurance is not the best way to save up for college. One asset it does have is that in a way, it becomes a required savings account for college. However, the fees are still unjustifiable in the end. College funds are just really icing on the cake and should not be the main purpose of life insurance.

It is still hard to answer if anyone really needs life insurance for children. Many sources say that since child mortality is statistically low, availing of this kind of insurance could be an unnecessary expense. However, considering getting one is still necessary to maximise insurance coverage for the family.

What should I consider before availing?

The first thing you must decide on is if you really need life insurance for your child. Sudden and unexpected costs of the death of the child, to put bluntly, will cancel itself in having one less dependent to the family finances. While some will appreciate this extra security, the benefits are often negligible.

One other thing to decide on is if you have money. Most of the parents who avail of life insurance for children often have extra money and can easily use these funds to avail of additional insurance. It is up to you to decide if these funds are better off being invested in insurance rather than kept for emergency purposes.

The importance of child life insurance could also be assessed through the parental medical histories and background. If the parents are prone to genetic disorders such as diabetes, hypertension, or the similar which would be likely to be inherited by the child, getting an early life insurance could mean a lot of savings in the future. For example, if a child grows up and develops type II diabetes, he or she would only need to extend his or her insurance. There is no need to find a new policy that would have to accommodate the individual’s recent health status which could mean significant increases in the calculation of the premiums.

Why not get this kind of insurance?

It is not a savings account and it will not be the best way to save money for a child’s future expenses like education. If you want to prepare children for these types of expenses, pooling money in saving funds is a better option.

Remember that when availing insurance, the money that you give will go through several reductions which will include commission costs and other charges by the insurance companies. Although insurance have tax cuts, there are still more productive ways of saving for the future. The ability to get accumulated money at the end of an insurance term must be considered only as an added feature and not the primary purpose of these type of life insurance policies.