National Best

Insuring Children

Purchasing life insurance or critical illness coverage for children can sometimes be a delicate subject. Many financial planners field that parents should get complete coverage themselves and should be spending every last penny on their own retirement savings rather than apply money to coverage for their children, who may not need it until they are much older.

However, there are some good reasons for setting up life insurance on your children.

The first one is that it guarantees insurability into the future. That means if your child were to become ill or have some medical condition that prevented them from getting insurance in the future they would already have coverage and in many cases could expand on that coverage with a guaranteed insurability option built into many life insurance contracts for children. This also applies to children whose parents may have hereditary health issues that could disqualify them from full coverage in the future or at least inexpensive coverage.

Finally, life insurance as we know is one of the most efficient tools for estate and Legacy transfer. For parents who wish to save money for their children’s future life insurance can be an excellent tax-deferred vehicle. Many investment advisors are against participating whole life insurance as a savings vehicle for children and they often cite the low rates of return. But those rates of return are magnified over time and for a 15 day-year-old child a par whole life policy at age 65 can become an extremely valuable asset that cost them nothing and that required no maintenance if set up properly by their parents.

We always recommend at least considering child coverage depending on the financial circumstances, future plans and estate transfer needs of the parents.

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