Life Insurance for Babies

Baby life insurance and insurance for juniors make up a program that has been devised to help make young ones become independent and handle important stages in their lives. Life insurance for babies continue for a certain number of years — say, 10 or 15—and concludes when the child reaches a certain age of maturity—say, 18 or 25.

An Overview of Life Insurance for Babies

Baby life insurance is a thoughtful action on the part of the parents. It is they that have to plan for the future of their child and make sure that as he grows up, he doesn’t have a paucity of funds to chase his dreams. Also, in some policies, companies insure the parents as well. This way, in case of untimely death of the parent, the company itself pays the premium of the policy.

Benefits of Life Insurance for Babies

Life insurance for babies is really helpful for them, so as they grow, they don’t have to work or take loans for completing their education and following a career of their choice. Also, you might think why should life insurance be bought for someone who’s just been born because it is not useful till the end of life? Well, life insurance is very expensive, and buying it at an age of 30 or 40 for oneself can prove to be pretty hard on one’s pocket.

The Cost of Life Insurance for Babies

If you have baby life insurance for your child, then it will be rather inexpensive. Also, if the policy is a whole life one and not a term one, then it will be highly beneficial for the child in a number of ways. This is because a whole life policy builds equity which can be used by a person at any stage of their life, like in paying a down payment for their home, or else for settling down with their family and also just passing on the money to kith or kin as they pass on.

Also, in taking baby life insurance, you as a parent will not have to worry about providing for the child when you are no longer able to work and support your family. This way, the child will have a sort of guardian provided by you in the policy and won’t have to work to make his way through college.

Considerations for Purchasing Life Insurance for Babies

However, there is a popular perception that baby life insurance policies are simply insurance products and not a savings scheme so they should be marketed as such. It is also believed that there are a lot of hidden costs in life insurance for babies. If money needs to be set aside for education purposes, then financial experts recommend a 529 plan rather than life insurance for babies.

What experts counsel is that parents should go in for a life insurance policy for themselves and should not in any case buy a life insurance for their kids if they themselves are underinsured. This is one condition where the needs of the parents should come before that of the children.

Obviously, the more mouths you need to feed, the more will be the opinions. It entirely depends on you and what you decide about purchasing a life insurance policy for your baby. The fundamental thing behind an insurance policy is actually to protect the income of the breadwinner of the family. The child in no way is the breadwinner, so logically the need for a policy at birth is not there.

If the future of the child is to be secured, then there are a variety of alternative investment options for you. They will definitely make you feel secure at having done the needful for your child or children.

Family Life Insurance

Your insurance policy depends on your age, health, retirement plans, income, and assets or wealth. Family life insurance is generally available for people who possess significant assets they want to safeguard for their family or the next generation.

Others also purchase life insurance for families to secure independence from other members of the family and not burden them when the policyholder gets sick or enters a nursing home.

Family Life Insurance Options

Life insurance for families hinge of three factors – coverage, cost, and benefits. The following types of life insurance policies are available in the US:

• Term – This type of family life insurance pays only when death occurs during the insurance term. This is usually the most affordable. Moreover, companies will charge you lower premiums for younger family members.
• Whole – Although a premium is set for the duration of the policy, this type offers families higher rates early on, when the risk of death is low, and lower rates when risk of death increases. This kind of family life insurance also has a cash value and can turn out to be more affordable for your family.
• Universal – This type marries the benefits of term and whole life insurance. Your family can borrow against its cash reserves that accumulate over time. Furthermore, your company will let you vary premiums and coverage amounts from one year to the next.
• Permanent – This offers families a lasting option, since the policy term does not expire after a period of time. The premiums for this type of family life insurance are higher. But if your company should reinvest your profits, you get paid dividends, which are not taxed, unless you use the cash value.
• Variable – Akin to an investment plan, this type of family life insurance can give you greater returns for your investment. However, since your insurance provider reinvests your profits in stocks and bonds, the cash value of your policy will depend on market performance.
• Single premium – If you have enough liquid assets, your can purchase family life insurance by making a single premium payment–which amount will, of course, be large, but could afford good security. This is a great option if you want to give an insurance policy to a member of your family as a gift. The main advantage is ZERO RISK of cancellation because of nonpayment. It often serves as a nest egg for families during better times, which can serve as a sort of contingency fund for the future protection of family members.
• Survivorship – This covers two family members under one policy. When one person dies, the remaining member gets no benefits. But when both pass away, the policy pays out. This is a great life insurance for families, parents in particular, who want a secure financial future for their children or dependents.

Life Insurance for Children

Insurance is simply preparation for the direct and indirect expenses of a future event. That is why many parents view taking out a child life insurance policy as too morbid to consider. However, there are several reasons why the subject of child life insurance should not be considered taboo in your family.

Whole Life Insurance for Children

Although most companies offer term child life insurance, which has small premiums and does not build cash, there are companies in the US that provide whole life insurance for children. If your insurance company can offer you a policy that does not expire when your child grows up, you can get the following benefits:

• Whole child life insurance allows them to get insurance at low premiums. Since premiums are guaranteed to stay at the same low rate for the rest of their lives, you give your child protection against the high premiums he or she would have to pay when life insurance is purchased during adulthood.
• Life insurance for children creates a financial safety net for them. Child life insurance can build substantial cash value over time. Your child will have the option to borrow against their policy, or cash it in if a future need should arise.
• Life insurance for children protects them against the added cost of changes in their health. Your child will probably take out a life insurance policy during adulthood–for which already higher premiums may be compounded by illness or sickness.
• Life insurance for children gives them benefits that can never be reduced or cancelled. Whatever health issues occur in your child's adult life, his or her child life insurance policy cannot be reduced or cancelled.

Term Life Insurance for Children

Even term child life insurance has its benefits. For example, it ensures future eligibility, which may be important if your family has a history of illness. If you take out an insurance policy on your child, he or she becomes automatically eligible for any type of insurance later in life.

Child Life Insurance Can Save Your Family

One of the main reasons why getting life insurance for children is a good decision is one that families often fail to accept – the death of a child. A child's death can be emotionally devastating, both to the parents and to the remaining children. It can be financially devastating too. Moreover, studies show that the possibility of dysfunction and divorce are high in a family that has suffered the loss of a child.

The family needs time to grieve and having a financial cushion can be a good way to buy time without depriving the family of the benefits of an income. Child life insurance can also pay for professional help and counseling for the family.