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Child life insurance

Children are the most important thing for parents and as a result they want to protect their offspring as much as possible. Loving parents usually spend a lot of time looking after their children and take all possible safety measures in order to make sure that the children is safe. It is unusual for parents to think about the possibility of the death of the children if they are healthy and energetic. However, more and more life insurance carriers are offering child life insurance whether as a separate insurance contract or as an additional benefit for those people that buy life insurance policies to insure their lives.

Advantages of child life insurance

However, child life insurance also has some advantages that also need to be taken into consideration. First of all, the average price of child life insurance is just £5 a month. For £60 a year the parents can buy the child a guaranteed insurability option in the future. After the child reaches adulthood, he can buy a new cheap life insurance policy from the same life insurance provider or renew an existing one. On the other hand, if a child becomes ill, for instance, with diabetes, and becomes uninsured, he can always keep the existing life insurance policy. As a result, child life insurance can be useful for the children of those people who have a long family history of illnesses such as diabetes or heart attack. Last but not least, some child life insurance programs have saving options attached to them. This means, that a fraction of premiums are used to save the money and invest them. This sum saved can be used for children education or to cover living expenses.

An alternative to a separate life insurance for children is called child rider. This is a benefit that some life insurance companies offer for people that have offspring, stepchild or an adopted child. To put it simply, attaching a rider means that additional text is written into a life insurance policy. In case of child rider, the text simply extends life insurance policy to child. A life insurance policy with child rider means that in additional to paying a death benefit when the main insured person dies, the policy will make a pay out in case of child death. Usually, child rider policy costs a flat sum of money regardless of the value of the policy before the child is attached.

Disadvantages of child life insurance

However, despite these facts critics argue that life insurance for children is an unnecessary thing and by advertising this life insurance policy life insurance carriers simply take advantage of parents that love their children. There are some very clear facts that can be used to base this opinion. First of all, children do not earn money or income. Though, it might sound horrible, the loss of child relieves financial commitments because parents no longer need to save for education or spend money for food, clothing and entertainment. The death of child can only bring emotional devastation and sorrow that money can not compensate.
Very often insurance providers of life insurance use a ploy to lure the clients that child life insurance is cheap. This is true, because despite the risk factors listed above children die rarely. However, even if only a small amount of money have to be paid monthly to life insurance provider, it is advisable to think about alternative ways where money can be put. For instance, £10 a month can be used by parents to purchase a higher life insurance cover for themselves or the money can be put into pension funds instead of buying life insurance for children. The life cover for child in case of death of his parents is more financially useful than the lump sum paid to the parents after the death of their child.

Furthermore, life insurance has a main purpose to replace the income that the insured person earns. Of course, some children are movie stars, singers or models and bring income to their family. In other words, if a child is future star of “Home Alone 5” than child insurance is an option worth consideration. However, these cases are rather an exception than a rule. Last, but not least, it is arguable that a person does not need a life insurance until he takes out a mortgage or becomes married with children. Until that time a person will start working and, as a result, most jobs will insure him. Therefore, critics believe that guaranteed insurability option is not necessary. They advice to put the money into a saving accounts and this way provide the child with an ability to get good education. This way, a child would have an opportunity to find a good job with a good life insurance. Statistics show that carefully chosen mutual funds or annuities after some time have higher value than the face amount of life insurance policy.

Advice for choosing child life insurance policy

For those parents that decided to buy life insurance for their children after all, experts offer some advice. First of all, usually the cheapest option is to buy a term life insurance contract for 20 years. What is more, it is advisable to make sure that the contract is renewable and convertible into whole life insurance policy. Furthermore, most life insurance companies do not offer child life insurance covers and a result it is wise to consult a financial broker firstly. Last but not least, parents have to be insured themselves fully first. One of the biggest mistakes is that parents search for life insurance for their children when they do not have life insurance themselves.