When we consider life insurance as adults, we often think about protecting our loved ones after we are gone. Most often we are thinking about covering our debts, paying end of life costs, and providing financial security for the loved ones you leave behind.
Have you ever heard of life insurance for minors?
Minor life insurance is life insurance coverage for children ages 0 to 17. It is typically offered in the form of term or whole life insurance; however, some adult policies offer a rider option. With minor life insurance, no medical exam is needed and enrolling your child at a younger age typically results in a lower premium.
Life insurance for kids? Why would anyone buy that?
Aside from the obvious reasons that people buy life insurance, purchasing a policy for your child can help secure their future, financially speaking. Some examples of that include the following:
- Future Insurability. Minor life insurance typically does not require a medical exam, making it easier to obtain. This also means that your child may be able to buy additional coverage later without completing a medical exam, which can be helpful if they eventually become seen as higher risk.
- Cost Benefits. We all know that life insurance can be pricy depending on your coverage options and your risk factors. When you purchase minor life insurance for your child, depending on the policy, they may be able to convert it when they reach adulthood or purchase additional coverage for themselves. This conversion or additional coverage is often cheaper than if they had not had minor life insurance to begin with.
- Investment Benefits. Depending on the type of minor life insurance you purchase for your child, it will build cash value. This cash value can come in handy later life to pay for college or a down payment on their future home.
There are several different options available when considering purchasing minor life insurance. These include:
- Term Life Insurance. Term life insurance policies are designed to last for a set amount of time, typically 10-30 years, and offer larger amounts of coverage for a smaller premium. However, these types of policies do not usually build any cash value and may or may not have a conversion option.
- Permanent Life Insurance. Permanent life insurance policies, sometimes known as whole or universal, are designed to last the entire life of the insured. These policies are often a bit pricier in comparison to a term (when comparing the same level of coverage), but they do usually build cash value and may have other benefits built in.
- Riders on Existing Policies. If you have an existing policy on yourself, you may be able to add a child rider. This would give your child some coverage and may be more budget friendly. Not all insurers offer riders, and the coverage limits and conversion options may be limited.
- Supplemental Life Insurance. If you have group life insurance through your employer, you may have the option to purchase supplemental life insurance for your child. It is important to note that these plans are tied to your employment, which means if you left your job, you may not be able to take the coverage with you.
The reasoning behind purchasing minor life insurance is different for every parent, but it is never a bad idea to protect those you love. To discuss your minor life insurance options and learn more, please give us a call at 844-GANNONS to speak with our licensed agents today!