Have you ever seen the TV commercials from Gerber, the baby food company, selling kids life insurance? You may wonder why a baby food company is selling child life insurance and why someone so young would they need it? After all, the chances of a child passing away are low compared to an older adult. And even if such an unfortunate event should happen, who would receive the death benefit and for what? There are scenarios when life insurance for children would be a good idea. Read on to learn more about them and learn more about the best life insurance for kids.
Should you buy life insurance for children?
Death is an uncomfortable topic to discuss, especially the death of a child. But it’s necessary to discuss this matter to get a better understanding. If you’re wondering if child life insurance is worth buying, think about how expensive burial costs are. The average cost of a funeral is between $6,000 and $7,000. In contrast, a kids life insurance policy with a death benefit of $10,000 costs roughly $6.50 per month.
Why you should buy life insurance for children
The chances you’d outlive your child or grandchild are extremely low. Nevertheless, there are reasons why you would want to buy a kids life insurance policy. According to insurance expert, Laura Adams, “The purpose of having different types of insurance is to reduce financial risk and give you peace of mind. When it comes to life insurance for children, there are pros and cons parents should consider.” Take a look at when life insurance for children is ideal.
If your child suffers from a life-threatening illness
Life insurance for children is a good idea if your child suffers from a debilitating or chronic illness. Larger amounts of life insurance would require a medical exam, but you could buy insurance for smaller amounts to cover burial costs, for example, without the child having to undergo a health check.
If your family is genetically predisposed to certain conditions
If you’re concerned that your child may inherit a genetic or medical condition, buying life insurance for your child before the condition becomes chronic or life-threatening could lock in future life insurance when the child becomes an adult.
Imagine a scenario of a child developing a medical condition that wouldn’t be insurable. Adams says, “Purchasing a permanent life policy early in the child’s life guarantees they have at least that much coverage as an adult. And if your child dies, the policy would help you pay funeral expenses and other costs.”
You can choose a term life insurance policy with guaranteed renewal or that can be converted into a permanent life policy. Term life insurance policies are cheaper and don’t require a medical check at renewal or conversion.
Or you can purchase a permanent or whole life insurance policy early on. Whole life policies are more expensive, but the rate will be locked in for life. As long as your child continues to pay for the policy through adulthood, the rates and coverage won’t change.
Why you should not buy life insurance for children
Some life insurance companies will push you to choose a whole life policy to serve double-duty as a life insurance payout and college savings. A whole life policy is permanent – it has no expiration date and has a cash portion to it. The premium you pay goes towards the death benefit and a savings account. The problem is, there are better ways to invest the premium you’d pay for the policy.
According to Adams: “While a permanent life policy accumulates a cash value over time that you can use for any purpose, the main downside is that it may have relatively high fees and not be the best investment vehicle. You may come out ahead by using a 529 college savings plan or a regular investment account.”
Where to purchase life insurance for kids
If you still think that a kids insurance policy is the right choice for your family, the best life insurance for kids is available from:
As mentioned, you’ve probably seen the commercial on television. Gerber is best known for selling baby food and products, but also has a life insurance division known as Gerber Life. You can buy permanent life insurance policies for children between the ages of birth to 14 for an amount of $10,000 to $50,000.
Mutual of Omaha
Mutual of Omaha sells whole life insurance for children. You can purchase a policy for a child as young as 14 days old until they’re 17 years of age. Benefit amounts are between $5,000 and $50,000 and can be purchased online or through an insurance broker.
Transamerica drops the minimum on life insurance for children. You can buy a policy with a value of $1,000 to $50,000 for an infant or child up to 17 years old. To get more information about child life insurance from Transamerica, you would need to speak with an agent or visit a local participating broker.
The highest-value kids life insurance can be found through Foresters Financial. It was recently introduced and offers coverages of $5,000 to $75,000 for kids up to the age of 17. You’ll need to connect with an agent to get a quote or buy life insurance.
Frequently asked questions
Do I need child life insurance?
Unless your child is chronically or terminally ill, you’re better off investing for your child’s college account in a mutual fund or other investment types. As for unexpected expenses, insurance expert Laura Adams recommends maintaining “a healthy emergency fund.” Adams says, “For most families, having a financial cushion is a smart way to manage unexpected expenses.”
What is whole life insurance for children?
Whole life insurance is permanent and doesn’t have an expiration date like term life does. Whole life insurance comes with a set premium for life. As long as you continue to pay your premiums, whole life insurance is in effect. You can purchase a policy while your child is young and insurance is inexpensive and the premiums paid will go towards the death benefit and a cash value account your child can borrow from in the future.
Why would someone want to buy kids life insurance?
A kids life insurance policy can help pay for funeral costs. Considering that life insurance for an infant or child is as little as $5 per month, it’s far less expensive to pay for a $5,000 or $10,000 life insurance policy than an actual burial.