INSURANCE

Life Insurance for Children
Fortunately, the statistical chance of a child dying is very low. However, there are three very good reasons that permanent life insurance on children is a smart purchase.

Cost
Policy premiums are based on the age of the insured at the time of issue. The younger the insured, the lower the annual cost. What’s interesting about life insurance is the fact that the cumulative total amount of premium paid over the life of the policy is about the same, regardless of when the policy actually started. In other words, over the life of the policy, a 20 year old will pay the same total amount of money on a permanent life insurance plan as a 50 year old will pay. But, the younger the insured is when the policy is purchased, the lower the cost per year.

Opportunity
Think back to when you were a young person first heading out into the world. There was a lot of competition for a piece of the meager income of someone who’s just starting out. Was life insurance even on that list of things to buy? The same is true for kids today.

But you have the opportunity to insure your children or grandchildren now before they have to start fending for themselves. And when you’re ready to pass the policy — and the payment — along to the child, his or her premium will be low and easier to fit into a tight budget and keep in force.  After all, the only good life insurance policy is the one that’s in force at the time of death. Keep in mind, too, that permanent or “whole life” policies develop cash value, which is paid if the policy is cancelled.

Insurability
This is probably the most important reason to buy permanent life insurance for children. The likelihood of an accident or illness robbing someone of the ability to buy life insurance later in life is much greater than the likelihood of death. That’s also why a child’s life insurance policy should also include a guaranteed purchase option (GPO) or similar provision. This guarantees that the child can increase the amount of coverage at specified dates in the future, regardless of his or her health.

Being older and wiser, you understand the need to prepare for what lies ahead, and recognize the opportunity to purchase a starter policy today that your kids or grandkids will need and appreciate tomorrow.