According to results of a survey undertaken by an insurance industry-funded non-profit called “Life Happens,” approximately one-quarter of the respondents said they recently bought life insurance because of the dangers represented by Covid-19. Fears of potential long-lasting negative effects of the virus convinced many that the guaranteed insurability provided by whole-life insurance was reason enough to make the purchase. This is especially true when it comes to buying a life insurance policy for a child. Guaranteed insurability later in life is one of the primary reasons parents have for insuring their children. There are others.
If you’re an adult, qualifying for a life insurance policy often means passing a health examination. Your insurer wants to know if there are any health concerns of which they should be aware that would affect your policy premium amount or your eligibility for their coverage. Once a whole-life policy has been issued, your eligibility for that policy to be renewed is guaranteed for life, as long as the premiums are paid, regardless of what medical condition(s) you may later contract.
Your minor children, however, are typically not required to undergo a health examination to qualify for whole-life insurance and, once covered, they too will have guaranteed insurability for life and, as long as the premiums are paid, they can renew their coverage for life. Another benefit is that they are guaranteed that their premiums will never rise in cost unless additional protection is added to the coverage. While you, as the parent, will typically be the owner of your child’s policy, ownership can be transferred to the insured at any time, typically once the child is no longer a child.
Other Reasons to Buy Life Insurance for Your Children
Guaranteed insurability is probably the number one reason for you to buy life insurance for your child. You’ll know that they can have insurance even if, later in life, they experience a change in their health status. It’s also worth mentioning that, should your child take up what’s considered a high-risk hobby such as rock-climbing or motorcycle racing (which can make getting life insurance especially difficult and/or expensive) they’ll already have insurance and with no increase in price.
Buying life insurance for your child allows you to lock in a low premium rate, as each year that passes rates increase. Whole-life policies also accumulate a cash value that can be accessed when needed.