This isn’t the most enjoyable subject but is one that is worth thinking about. Life insurance for children also isn’t something that new parents would typically think of, but is it necessary?
When having a child, this is the last thing that new parents want to think about. Preparing for the unimaginable is maybe a smart thing to do, but even considering it is enough to fill a new parents heart with sadness and despair.
When asking if child life insurance is worth it, we first have to consider the ins and outs of child life insurance, the various scenarios and different policies.
What is life insurance for children?
As with normal life insurance for adults, this insurance pays out a decided sum of money if a child dies or is diagnosed with a terminal or life-threatening condition during the time they are a child. The age at which they stop being a child according to most life insurance policies is 18.
Why would I need life insurance for my child?
Obviously, every insurance policy will be different in what they payout is and when that would be paid out. The most common case is that the insurance company would payout when the child sadly passes.
You could also get some of the money if your child is diagnosed with a serious condition that makes you unable to work. Your life insurance policy may help you cover your living costs.
Similarly, if your child is diagnosed with a terminal condition, their life insurance could be put towards treatment. While life insurance policies aren’t specifically for this reason in the way that standard medical insurance is, some policies are structured in this way.
Does my child have to have a separate life insurance policy?
In most cases, it isn’t normal to get a separate child life insurance policy. Usually, parents are able to add their child to their life insurance policy. There is no practical reason to put them on a separate policy unless a different insurance provider offers a particularly good child life insurance policy and you want to stick with your existing provider for yourself.
What are the options for child life insurance?
Adding your child to your own existing policy is called rider insurance and is by far the most common form of child life insurance.
The next option is called term life insurance. For this policy, parents will typically pay a monthly amount to cover the child until they turn 18 and are no longer a child. If your child dies you will get a pay out from the insurance company. This option is best for children that are too old to be added to your existing life insurance policy, or for other reasons, you want them to have their own policy.
How to choose the best policy for your child?
With hundreds of different policy options out there, it can be hard to pick the one that is right for you and your child. The one that’s best for you may not be for someone else because of economic status, age of child etc.
It helps to consider some questions about your child and situation when choosing a policy.
- Who do you want to insure?
If you want to cover your whole family and you have an existing policy for yourself and your partner then it may be easier to add your child to the existing policy.
- How long do you want the policy to last?
You need to consider whether you want a policy to carry on after they become an adult or to end. Whichever you choose will provide you with different options and different pay ou amounts. You will also have fewer options to choose from the older the child is when you start the policy.
- Will your child be accepted onto a policy?
Insurers notoriously apply a lot of restrictions onto policies as they typically don’t want to pay out unless they absolutely have to. Your child obviously has to be in a certain age range, but their health may also be taken into account. If you are applying for a life insurance policy when they have already been diagnosed with a terminal condition then you will be out of luck.
Now we have all the information, is child life insurance worth it? The answer would have to be yes. While it is deeply saddening to think about and actually go through the process of getting child life insurance, if the worst did happen, for a small monthly fee you could protect yourself if you need to stop working and pay for funeral costs. While child mortality rates in the UK are far lower than adults, it’s not impossible and it always pays to be prepared.