As explained in my previous article, I believe setting life insurance up for children is very important to not only get the best rates but more importantly to guarantee eligibility for future life insurance purchases.
There are many ways to set up life insurance for children, but the two most common ways in our office are through a child rider or through a permanent insurance policy.
A child rider is a rider that is placed onto a parent’s policy to cover the child from application date (as young as 14 days old) to 23 years old. Typically this rider provides a small amount of death benefit for a period of years. When the child reaches a certain age (typically 18-23 years old), the child has the opportunity to convert the policy from a rider to another standalone policy (term or permanent). These riders are fairly inexpensive ($15,000 for less than $100 per year), but they often have a maximum amount of death benefit available upon purchase.
A permanent insurance policy is an independent contract written on the child. These contracts may be susceptible to full underwriting which requires more medical questions to be answered compared to a child rider. The benefit for most permanent policies is that you can set up the policy to gain a cash value over the years. This cash value can be used later in the policy to purchase additional death benefit or to assist in paying the annual premium.
Purchasing life insurance for children can be done in many ways. There is not one way that works for every family.
Contact our office to discuss the best option for your family.