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Get A Better Understanding Of Child Life Insurance

Get A Better Understanding Of Child Life Insurance

Child life insurance can be a difficult subject for parents to think about. Losing a child is the saddest thing a parent can go through. So when it comes to considering whether or not to purchase child life insurance, many parents have questions but don’t know how to ask or even what to ask. This article will answer many of the questions parents have about child life insurance, so keep reading below.

What is Child Life Insurance Exactly?

Child life insurance is a type of permanent life insurance plan meant to insure the life of a minor child. Permanent life insurance means insurance that lasts for the life of the insured and pays upon the death of the insured. Child life insurance is meant to aid families in paying for the funeral and burial costs of a child. Most child life insurance policies also allow for borrowing against the cash value of the policy.

Who Can Buy a Child Life Insurance Policy?

Parents and legal guardians can purchase a child life insurance policy for a child. Grandparents are also able to purchase a child life insurance policy. This is common in families in which the parents don’t yet have the financial means to insure their children. It may also be a gift from a grandparent to a child or a grandchild that provides financial security and the opportunity to be insured later in life.

How Much Does it Cost?

As with any life insurance policy, how much a policy costs depends on a variety of factors. In general, child life insurance is intended to pay for the costs associated with the death of a child. For that reason, policies are usually not too large. Average is around 10,000, as that is the current average estimate for funeral services plus some room for unexpected costs. Since the amount of coverage is comparatively low the premiums for child life insurance usually aren’t very high. This makes child life insurance affordable to more families.

What are Some Benefits of Child Life Insurance?

One of the major benefits of child life insurance is what it can do for a child who develops a chronic or terminal disease. If the parents purchase the insurance policy when the child is still healthy, then the insured child will have a better chance of keeping life insurance into and throughout adulthood. Insuring a child before she or he develops health issues can keep that child from being denied coverage later as an adult.

Another benefit of child life insurance is that it can build cash value over time. Every whole life insurance policy includes an investment component in the form of a cash account. As that cash account builds, your child gains a savings. Once that child comes of age and needs financial assistance, the cash value of the account can be used to borrow against and pay for a vehicle, a move, or part of their college education. Find out when you purchase the policy if there are penalties for withdrawing cash early.