There has been quite a bit of press recently on the subject of child life insurance. It is understandable an emotive subject. No parent wants to contemplate something happening to their child, but rather like making their own will or having adequate coverage themselves, child life insurance can provide peace of mind. Consequently, more and more life insurance companies are offering child life insurance whether as a separate insurance contract or as an additional benefit for those people that buy life insurance policies to insure their own lives.
Advantages of child life insurance
Purchasing child life insurance has some advantages that could be taken into consideration.
Future Planning – First of all, the average price of child life insurance is just £5 a month. For £60 a year the parents can buy the child a guaranteed insurability option in the future. After the child reaches adulthood, he or she can buy a new cheap life insurance policy from the same life insurance provider or renew an existing one usually at a lower premium than a new customer.
Family Illness – Similarly, child life insurance can be useful where there may be a long family history of illnesses such as diabetes or heart attack. It can provide a solution to finding affordable cover as an adult.
Financial Planning – Some child life insurance programs have saving options attached to them. This means, that a fraction of premiums are used to save the money and invest them. This sum saved can be used for children education or to cover living expenses.
Disadvantages of child life insurance
Critics argue that life insurance for children is an unnecessary thing and life insurance providers are looking to take advantage of parents that love their children.
Lost Income – Traditional adult life insurance provides cover for loss of income and in general children do not generate any money. Therefore unless they are future sporting or acting stars covering their lost earnings will not be necessary.
Other critics will argue that a person does not necessarily need life insurance until he or she takes out a mortgage or becomes married with children of their own. Until that time a person will usually be working and, as a result, many jobs will insure him / her. Therefore, they believe that guaranteed insurability option, mentioned above, is not necessary.
Free Healthcare – Unlike other countries where a long illness may run up substantial healthcare bills, in the UK this is unlikely to happen.
There is an interesting article on the topic of this and what happens to students loans on the Guardian US Money blog
Advice for choosing child life insurance policy
For those parents that decided to buy life insurance for their children after all, experts offer some advice. First of all, often the cheapest option is to buy a term life insurance contract for 20 years. What is more, it is advisable to make sure that the contract is renewable and convertible into whole life insurance policy. Furthermore, some life insurance companies do not offer child life insurance cover and a result it is wise to consult a financial broker.
The Lloyds of London’s website is a good place to start.
Last but not least, it makes sense for parents to be insured themselves fully first. One of the biggest mistakes is that parents search for life insurance for their children when they do not have life insurance themselves.
