Life Insurance Options for Kids

One of the questions we ran into a lot when we were working in the insurance business is, “Why should we put life insurance on our kids.” The answer, abrupt as it may sound, is quite simple: because they could die. Nobody wants to think about their children dying while they are young, of course, but it is possible. So, whether you cover them with term life insurance policies or permanent insurance, don’t neglect insuring your kids’ lives.
How Much Life Insurance Do I Really Need for My Kids?
Kids don’t come into the world with a lot of debt. That starts when they go to college. The only thing you really need to cover for your kids are their final expenses and enough money to allow you to grieve without reporting right back to work on Monday. In most cases, $10,000 is more than enough life insurance to handle that.
Of course, if you are buying permanent life insurance, you may want to consider buying a larger amount. The reason for this, quite simply, is that you lock in a low premium, guaranteeing that your child will be able to continue that life insurance at a low rate for the rest of his or her life. On top of that, you build cash value for your child.
There are many whole life policies which also guarantee your child the right to buy more insurance when he becomes an adult, regardless of health issues he may have developed. And example is Gerber’s Grow Up Plan.
Term Options
On the other hand, if you are buying term life insurance for yourself, many insurance companies will allow you to add small policies on your children as a rider (a small policy that “rides” on your larger policy) on your policy. Sometimes, one small price will cover all of your natural and dependent children.
Some whole life policies even allow you the option of adding your children onto your policy with a term insurance rider. Ask your insurance agent. They often fail to mention term insurance rider options because the commissions on them aren’t very good.