It’s easy to appreciate the need for an adult to have life insurance. It allows you to sleep soundly in the knowledge that your loved ones would have the means to pay the funeral costs, in the result of your death, and to cover the loss of your income. Although children don’t tend to have an income on which a family would rely, parents are increasingly seeing the value of having children’s life insurance in place, as well as their own.
Why insure a child?
It’s hard to even contemplate the possibility of the death of a child; regrettably, it does happen. After such a tragic event, it would be unthinkable to expect close family to continue with their usual routine, including work, which could result in a serious drop in earnings at a time when the last thing anyone needs is additional stress. Children’s life insurance can, therefore, not only cover the cost of the funeral, but can also give the parents the freedom to take a leave of absence long enough to learn to cope with their devastating loss.
About children’s life insurance
Children can be insured via add-ons to their parents’ insurance or via separate policies taken out for them.
- Unlike many adult policies, there is usually a limit to the benefit – the amount payable on death – available for a policy relating to a child; this tends to be in the range of £25,000 to £50,000.
- Due to the lower amount that can be claimed, children’s life insurance costs less than that for adults, though the cost of the premiums – the amount paid for a particular amount of cover, e.g. monthly – can vary. naturally, cheaper premiums will result in lower benefits.
- Although the usual age at which a child’s policy terminates is 18, they can also run until the age of 23, allowing parents to keep their children covered until they leave university.
- Insurance companies allow some children’s policies to be converted to adult ones when they come of age, at a lower price than it would cost for newly insured adults.
- Permanent life insurance policies continue to increase in value as long as they are maintained, making them a low-return investment, one which doesn’t accrue a high percentage of interest but is low risk and generally reliable.
- No medical examination is necessary to secure life insurance for children.
Additionally, as children are not liable for tax, the money paid out on a child’s life insurance policy is also not taxable.
There’s no doubt that insuring the life of parents should be the first priority, but acquiring life insurance for children is a sensible part of a family’s overall economic strategy. As well as performing the invaluable function of providing a financial safety net against the costs of a funeral and bereavement leave, insurance can be an investment. When weighed against the long-term potential benefits, the relatively low outlay makes children’s life insurance a useful and affordable option.