All about buying Life Insurance for your Children.

Many would assume that life insurance on a child is a waste of money since the child will not die for many years. While statistically true, there are cases where a death benefit is paid on a child although rare. However, buying a permanent life insurance policy for a child benefits them significantly in the future from much lower premiums. Also, depending on how the policy is funded after 18 years of paying premiums there may be enough policy value that it can be tapped in the form of a loan from the policy to help pay for college.

When I was born a local insurance company gave all babies born in the hospital a small whole life policy with the first year at a substantially reduced premium. It worked because my parents kept paying the premium and eventually changed it to a larger policy as I got older. I converted the policy again later as I graduated college and still have the remnants of that policy today. I am thankful I got the policy started out young as my cost remain now far below what I would pay for the same policy purchased now.

Parents and grandparents with this forethought really do help the kids out for their future. In addition to better pricing getting a child a permanent life policy before something happens where they become uninsurable, really helps them secure their insurance needs when they are still eligible. This is perhaps the biggest reason, even more than the pricing reasons.

Buying a policy for a child is a relatively simple process. The parent or grandparent with the parent’s permission can buy the policy. It can then later be gifted to the child, subject to gift tax limits (to give it without any gift taxes kicking in). Policies are typically limited to $100,000 death benefit until the children are older. There are exceptions when specific reasons can be validated for a greater amount of insurance. However since kids typically are not working it is a fairly high bar to cross before a greater amount can easily be issued.

There are some carriers who will issue more death benefit on permanent policies with slightly older kids and reasonable explanations.  We help you pick the right plan based on the needs and reasoning for the extra insurance. For assistance from an advisor with life insurance in Houston we can help you understand and pick the most appropriate coverage.

Ultimately thinking ahead and securing insurance for a child is one of the best gifts the child doesn’t even understand they received. Later in life though they should be grateful for the forward thinking when the child was still young.