Every parent in this world wants the best for their child and can do anything to secure their future. When it comes to providing a secure and comfortable future, life insurance is the first thing that may come to your mind.
Through this article, we will provide you clarity about the options available in case of life insurance products for children. Also, we will discuss what is the criteria you should follow to select a suitable plan for your kid.
In this article we are going to cover the following:
Let’s jump right in!
Types of Child Life Insurance Plans
This plan provides for children’s whole life insurance policy which means that it continues to provide the benefits of the insurance to the child throughout their life, as long as the policy premiums are paid. This is different from traditional term life insurance plans wherein insurance cover is extended for a particular period such as 15 years, 20 years, and so on.
You can purchase this policy for a child between the ages of 14 days and 14 years if you are their parents, grandparents, or legal guardians. The plan not only provides a death benefit but also helps you build cash value for your child.
With GerberLife, you can avail of the Grow-Up Plan as well as other life insurance products with a simple application process. You can request a quote online through their website and choose a plan that suits your needs.
Here are some features that define a Grow-Up Plan:
- The policy can be purchased for a child whose age is between 14 days to 14 years. This means that you can start to build a future for your child right from the time they are 14 days old!
- The amount of initial coverage that can be opted for the plan ranges from $5,000 to $50,000.
- You continue to remain an owner of the policy and are required to make periodic insurance premium payments until your child attains the maturity age of 21 years. When the child reaches this age, they become the owner of the policy. Your child can decide whether they want to continue the policy plan and pay the forthcoming premiums or surrender the policy to claim the accumulated cash value provided under the policy.
- After attaining maturity, if your child decides to continue the policy, they get an option to avail of an additional life insurance cover at prevailing standard adult rates.
- The face value that you invest in the plan doubles on its own when your child turns 18, without you incurring any extra cost. This is because the policy premium that you pay remains the same. Let us say you start with $20,000 then you can expect it to grow at $40,000 when your child turns 18.
Child Term Rider Plan
A Child Term Rider Plan is one that allows you to add your child to your existing life insurance policy. This eliminates the need to buy a separate insurance policy for your child. The policy works just like a standard term life insurance policy and entails the following features:
- The policy provides coverage to children in the age range of 15 days to 25 years (21 years for some companies).
- The premium that you need to pay to add your child as a rider to your insurance policy is the same irrespective of how many children you want to add.
- Once the child attains the age of maturity, the plan can be converted into permanent life insurance and the coverage can go up to as much as five times the original coverage amount.
Benefits of Child Life Insurance Plans
We have seen how the Grow-Up Plan and the Child Term Rider Plan differ from each other. Now, let us understand the benefits offered by each plan separately.
If you invest in a Grow-Up Plan for your child then you can expect the following benefits for your child:
- The plan provides lifetime coverage to your child. This is because this plan is a whole life insurance policy. If your child unfortunately faces health issues in their later stages of life, the insurance coverage will take care of their financial needs.
- If an insurance policy is bought by an adult, the policy premium is affected by the age factor and is thus high. However, if you buy an insurance plan for your child at an early age, the insurance premium that you pay for them will be comparatively lower.
- This policy helps you to accumulate a cash value which grows year by year as you pay the premiums. If any financial emergency crops up in the future regarding health, education, or otherwise and your child needs cash immediately, you can borrow the required funds against the accumulated cash value lying in your plan. You can choose to pay back the loan as per your terms and the amount of policy coverage is reduced until the time you pay back the loan.
Child Term Rider Plan
A Child Term Rider Plan is opted by parents due to its following benefits:
- The option of adding a child as a rider to your existing life insurance policy is a less costly affair as the incremental premium that you pay will be less than the premium that you will have to pay if you go for a separate policy for your child.
- Your family gets insurance cover for your child and a death benefit is provided to your family in case of the unfortunate death of the child.
- You can add more than one kid in the same policy without incurring any additional premium cost.
How to Choose the Right Plan for Your Child
If you are looking forward to some plans for your family or a specific plan for your child’s college education, GerberLife offers a lot of options. There are certain factors that you will need to consider to decide which life insurance plan is best for your kid.
Draw Up Estimates
If you are planning to invest in a life insurance plan you must be having a fair idea of the funds that you are expecting to accumulate for your child. Understand your needs and decide how much money will be required for their education, employment, marriage, and other needs. Once you have an estimated amount, you will be able to choose a policy that can help you grow your policy amount to the target amount by the time your child reaches such an age that they require the funds.
Check for the benefits that are provided under a plan. Some plans may provide for additional health cover or other lucrative benefits. Read through the policy document to find the specific benefits granted by the plan. Yes, we know that is tedious, but it’s worth the effort.
Confirm Premium Amount
Once you have the policy options before you, you will know the amounts you will have to pay as premiums. Compare the plan options by the premium charges that you will need to pay annually for each. This helps you figure out what you can afford. Another important financial factor that you must compare is the return that will be earned on the policy. This comparison will enable you to choose a policy that gives you the highest return and maximizes the cash value.
Check Parental Death Benefits
If you are planning to buy a whole life insurance policy for your child in their name, confirm from the insurer whether a waiver will be provided for premium if the parents die. You need to know what happens to the policy in case you are no longer around to pay the premiums.
If you follow the guidelines outlined in this article, you should be able to easily figure out which policy plan you should buy for your child.
Getting a life insurance policy should be a hassle-free experience and that is the norm at GerberLife. Since you don’t need a medical examination before buying an insurance policy for persons aged less than 51 years, this should be fairly straightforward.
In this article, we have tried to provide you a comprehensive guide about the insurance plans for kids. We hope that this serves as a useful resource for you.