When we think about life insurance, we usually think about protecting ourselves, our spouses, or our children financially if something happens to us.
But what about insuring our children?
It may not be something that immediately comes to mind. After all, children typically don’t have an income to replace or a mortgage to protect. However, there are several important reasons parents and grandparents choose to purchase life insurance for children-and one of the biggest is protecting their future insurability.
At Chickadee Insurance, we believe insurance should be simple, personal, and tailored to your family’s needs. Here’s why purchasing life insurance for a child while they’re young and healthy may be worth considering.
LOCK IN COVERAGE WHILE THEY’RE YOUNG AND HEALTHY
Once of the most important potential advantages of purchasing life insurance for a child early is that you are applying before future health conditions have a chance to affect their ability to qualify for certain coverage.
Life insurance is generally medically underwritten. Depending on the policy and insurance company, an insurer may consider an applicant’s health history, medical records, prescriptions, and other information when determining eligibility and pricing.
That’s why timing can matter.
A child may be perfectly healthy today but develop a medical condition later in life. Once a condition is diagnosed, obtaining certain types of life insurance may become more complicated, more expensive, or potentially unavailable from some carriers.
Purchasing a policy early can establish coverage before those future changes occur.
WHAT ABOUT ADHD AND OTHER DIAGNOSES?
This is an important point for parents.
A diagnosis such as ADHD does not automatically mean a child cannot get life insurance. Every insurance company has its own underwriting guidelines, and decisions are based on the individual application and specific condition, treatment, severity, and other factors.
However, applying before a diagnosis or other significant change in health can give your child an opportunity to qualify based on their health at the time of application.
In other words, you don’t necessarily want to wait until you need coverage to start thinking about whether you can get it.
Help Protect your Child’s Future Insurability
One of the biggest reasons families consider permanent life insurance for children is the possibility of having coverage that remains in place as the child grows.
Some children’s life insurance policies may also include features or “riders” that allow additional coverage to be purchased later without requiring new evidence of insurability, depending on the policy and carrier.
This can be particularly valuable if the child’s health changes later.
For example, imagine purchasing a policy when your child is healthy. Ten or fifteen years later, they develop a medical condition.
If their existing policy remains in force, a future health diagnosis generally doesn’t allow the insurer to simply cancel that existing coverage because of the change in health.
That’s an important distinction:
You can’t predict your child’s future health - but you can plan for it.
Secure Potentially Lower Premiums
Age is another reason some parents choose to purchase life insurance early.
Permanent life insurance generally costs more than the term insurance, but purchasing coverage at a younger age can help establish a lower premium compared with waiting until adulthood, depending on the policy and carrier. Guardian notes that children’s whole life insurance can provide lifelong coverage while establishing premiums when the child is young.
The exact cost and benefits depend on the insurance company, policy type, coverage amount, and underwriting.
Provide Financial Protection During an Extremely Difficult Time
No parent wants to imagine losing a child.
Unfortunately, the financial consequences of such a loss can add another layer of stress to an already devastating situation.
A life insurance policy can provide funds that may help with expenses associated with a child’s death, including funeral and burial expenses and other immediate financial needs.
The purpose isn’t to put a financial value on a child’s life.
It’s about making sure that, if the unthinkable happens, parents aren’t forced to make difficult financial decisions while grieving.
A Policy Can Potentially Grow With Your Child
Certain permanent life insurance policies accumulate cash value over time.
Depending on the policy, premiums, guarantees, interest or investment performance, and other factors, cash value may grow and potentially be accessed in the future.
That money could potentially be used for a variety of future needs, subject to the policy’s terms and tax considerations.
However, life insurance shouldn’t automatically be viewed as a replacement for a dedicated college savings or investment strategy. The right financial tool depends on your family’s goals, budget, and overall financial plan.
Give Your Child a Financial Foundation for Adulthood
Imagine your child reaching adulthood with an existing life insurance policy already in place.
They may eventually buy a home, get married, have children, start a business, or take on other financial responsibilities.
Having an existing policy can provide a foundation for financial protection that follows them into adulthood, depending on the policy structure.
Some policies also provide options for additional coverage or conversion as the insured grows older.
The specific options vary significantly by carrier, so it’s important to understand exactly what you’re purchasing.
Don’t Wait Until There’s a Reason to Need It
One of the biggest mistakes families can make with life insurance is assuming they’ll simply purchase it later.
The problem is that we don’t know what the future holds.
A child who is healthy today may have a completely different medical history ten or twenty years from now.
And while a diagnosis of ADHD or other medical condition doesn’t necessarily prevent someone from obtaining life insurance, health changes can affect underwriting depending on the condition and the insurance company.
Purchasing coverage early may give families an opportunity to establish coverage before those changes occur.
Think of it as protecting an option.
You’re not predicting that something bad will happen.
You’re giving your child something that may be harder to obtain later if their health changes.
Is Life Insurance for Children Right for Every Family?
Not necessarily.
Every family’s financial situation is different, and there are legitimate reasons someone may choose to prioritize other financial goals first.
Before purchasing a policy, it’s important to understand:
What type of policy you’re purchasing
How much coverage it provides
How long the coverage lasts
Whether the premiums are guaranteed
Whether the policy builds cash value
What riders or future purchase options are included
What happens when the child reaches adulthood
What happens if the policy is surrendered
How the policy fits into your overall financial plan
The National Association of Insurance Commissioners recommends understanding the policy’s benefits, costs, guarantees, cash values, and other features before purchasing life insurance.
The Bottom Line
Buying life insurance for a child isn’t necessarily about expecting the worst.
It’s about planning for the unexpected and protecting future options.
Starting early can potentially provide lifelong coverage, establish premiums at a young age, provide financial protection of tragedy occurs, and-depending on the policy-help preserve access to additional coverage later without requiring new evidence of insurability.
Most importantly, it can help protect something parents can’t predict:
their child’s future.
At Chickadee Insurance*, we’re here to help you understand your options without the insurance jargon or pressure.
If you’ve been wondering whether life insurance for your child makes sense for your family, let’s talk about it. We’ll help you explore your options, compare available coverage, and find out what may fit your family’s needs.
Because protecting your family’s future starts long before you need the protection.
Chickadee Insurance
Watching over your nest
Call 352-437-7482 or email summer@chickadeeinsurance.com to be connected to one of our life insurance partners to learn more about life insurance options.
*Summer & Chickadee Insurance are not life & health licensed. Any life and health products discussed, recommended, offered or purchased will be through a partner agent. This blog information is not an offer or recommendation of any life insurance product or insurance carrier and is for general information for consideration only. You are encouraged to discuss any information from this blog with your own agent or with our licensed partner agents.