Children's Life Insurance
When to Purchase Life Insurance for Children
When should you purchase life insurance for your children? Buy before they are diagnosed with an existing medical condition, because getting approved is then very hard. Does that mean every new parent should run out and buy a policy today? What about children who are born with an existing medical condition?
Almost every life insurance company requires that any policyholder pass medical underwriting in order to qualify for a contract. This poses a dilemma for new parents as most of their offspring will outlive them, and the need for life insurance is not terribly clear. Consider some pros and cons to purchasing a contract covering your dependents.
Purchase Child Life Policies When Most Affordable
Children life insurance can come in the form of cash value policies. The primary advantage of purchasing a cash value policy is the low rates, and rapid cash accumulation.
Children with Existing Medical Conditions
Purchasing life insurance to cover your child with an existing medical condition can be very challenging. Insurance underwriting will often ask about medical history before issuing a policy. Parents are often motivated to get coverage before a medical condition worsens, or their child’s special needs highlight the importance of having a policy.
Kids with existing medical conditions may have a shorter than average expected existence. Below are some common childhood medical conditions that may make it challenging to find a contract.
Children with Developmental Disabilities
Children with developmental disabilities may have a second life insurance consideration. Even when healthy, they may not be able to support themselves once their parents pass away.
In addition to eligibility considerations, parents may also consider purchasing life insurance on their own lives to leave a legacy to their offspring with developmental disabilities. Parents should consult with a financial planner or lawyer qualified to establish a special needs insurance trust. Death benefits are paid into the trust to ensure their eligibility for government entitlements.
Co morbidity is a common issue for people with special needs. A child with developmental disabilities may not be able to care for him or herself, but in addition may have serious medical conditions at the same time. This can make finding an affordable policy very hard. Below are some of the more common developmental disabilities and some basic guidance.
Parental Life Insurance with Child Riders
If you have a child with special needs, an existing medical condition, or developmental disability life insurance with child riders may be your best option for two very important reasons: insuring the parent’s life may be most important, and riders allow for guarantee issue policies for your kids.
A parent of a sick or disabled child may have greater need for life insurance than the average family. These kids may be dependents for the remainder of their lives, and an endowment is an established way to provide for them throughout their lifetime.
Once the parents have set up a plan naming their dependents as beneficiaries, they have the option of purchasing a child term rider on their base policy. Term riders have several features that allow parents to purchase coverage when children are unable to qualify for an individual contract:
No medical underwriting. This means a policy will be issued automatically, provided either one or both parents meet eligibility requirements and are approved for coverage. All medical conditions are accepted.
Same premium cost for the entire family. Whether you have one child or ten, you pay one premium amount, making this a very affordable option for larger families.
Future offspring automatically included. As your family grows, your newborns will be covered as well at no additional cost.
Convert to cash value permanent policy. Each child can convert their term rider to a permanent cash value policy up to five times the face value, with no evidence of insurability. Conversion is available when they reach age twenty five, or when the primary insured parent reaches age sixty five.