Life Insurance Options for Children

Life insurance is one of those things that none of us want to think about.  But if the unthinkable happens, your loved ones will have the peace of mind and financial resources they need to pay your final expenses, everyday expenses like mortgage, or set a portion aside for the future (i.e., a child’s education or spouse’s retirement).

But life insurance isn’t just for adults. There are also policies available for children.  True, life insurance is a tough subject to discuss, and it’s even tougher when it applies to a child, but it’s also a wise long-term purchase for your child’s future.

Life insurance is essentially a means to replace lost income when the insured passes away. For this reason, it’s important that the parents have their own life insurance policies—if the unthinkable happens, the family will receive a lump sum payout from that policy and won’t have to rely on the children’s coverage for expenses.  There are two kinds of policies—term and permanent. Most agents will likely recommend a term life policy for a child, which can be cashed out when the term expires and used as an additional source of income.

The other option is a permanent life policy (also known as whole or universal life) which is suitable for parents or grandparents with a generous amount of disposable income.  These policies are more like an investment (such as bonds or stock) that combine a death benefit payout with a savings component.  Cash accumulates in the savings portion and in some instances the recipient can withdraw cash. Permanent life policies can be complicated, so it’s best to work with a financial planner or insurance agent to design the best plan for your needs.

ETA Benefits Group works with several carriers that sell life insurance policies for both children and adults. Contact us to learn more about the different types of coverage available.

Do you have life insurance for your child? We’d love to hear from you in the comments below!