Purchasing life insurance for your children can admittedly be a little awkward or uncomfortable. Because this important matter doesn’t cross our minds frequently and since many people don’t want to talk about it, it is important to know the benefits of acquiring a policy early.
Protection against insurability - Because it’s hard to know or imagine if your children will develop conditions, disabilities or illnesses that will hinder their ability to purchase life insurance in the future, early coverage is a great option. Even hereditary conditions may exist in your family tree that will make it incredibly expensive or nearly impossible for your children to purchase life insurance later in life.
Lower premiums - The premium for a policy on a child is typically much lower than the same policy purchased on an adult. Certain life products have rates that you lock in and pay the same amount for the rest of the insured’s life. The policy can be structured to make the premium payments for the life of the policy. There are also options to make only 10 payments – or even a single deposit – to make the policy paid in full. The lower the age, the lower the premium.
Building cash value - There are advantages to purchasing a permanent policy that builds cash value over your child’s life. Tax deferral and tax-free policy loans are some of the tax advantages. Using the cash value for your child’s educational expenses or first home purchase are some of the cash value benefits.
Death benefit - While one of the major benefits of life insurance is income replacement, final expenses are also a big part of why life insurance is purchased. Most children don’t have an income to replace, but in dealing with a highly emotional, unthinkable event, the last thing you want to worry about is the financial burden of memorial services and returning to work right away. A life insurance policy will allow you the time you need to grieve.