You seek ways to secure your child’s future through adequate financial planning. Buying life insurance is a critical component in this regard.
Exploring and buying life insurance for a child is hard. Whether it be for a child or an adult, life insurance always conveys the aftermath of a death. However, there’s more to insurance than that.
Buying the right life insurance plan for your child can be helpful in unpredictabilities such as sickness, and it can add up to necessary investments like education costs.
Keep on reading to know if you really need insurance for children, or cut yourself some slack and visit https://www.insuranceforchildren.ca/child-plan to explore top-notch whole life insurance plans.
Life insurance for children: how does it work?
Life insurance for children works exactly as life insurance for adults does. If the insured one passes away, the beneficiaries get the death benefit in the form of a monetary return.
However, it is much cheaper compared to the insurance policies for adults. Moreover, the earlier you take an insurance plan for your child, the cheaper it gets. For example, some insurance providers let you get an insurance plan for your child when your child is 15 days old.
Unlike an adult, a child doesn’t need to undergo any medical examination to get insurance coverage. The insurance provider might ask a couple of questions about your child’s medical condition, though. However, if your family has a specific inheritable medical history, the insurance provider might refuse to provide insurance coverage for your child in that case.
Why do you need life insurance for your children?
So, do you need insurance for children in Canada? Or do you need life insurance for your children at all? Well, a single Yes or No can’t be an answer here.
Getting life insurance coverage can be a reasonable option to protect your children’s lives from all possible adversaries. Whole life insurance is more about the security of the beneficiaries than the insured one; a child’s life insurance gets you the benefits of investing the money for necessary expenses of their life. For example, the fund can be used for their educational and medical expenses or invested in buying their first home.
Furthermore, as any life insurance plan is about, a child’s life insurance coverage also allows you the time to grieve rather than getting yourself busy gathering medical expenses or making up for your leave coverage, should the unthinkable happen to your child.
Life insurance coverage options for children
There are three available options to consider life insurance coverage options for children in Canada –
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Child Term Riders (CTR)
CTRs are the cheapest way to get insurance coverage for your children. These are add-ons in your own life insurance policy covering your children at a small monthly fee. In addition, these coverage plans automatically protect all of your children without requiring any separate mention.
These plans offer guaranteed insurability up to a certain age of 22-25 years or up to your children’s marriage. At this age, your children can convert their coverage to an individual plan if they wish to.
CTRs provide a death benefit if one of your children passes away while the policy is in force.
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Stand-alone term renewable coverage
Unlike Term Riders, stand Alone Term Renewable Coverage policies are not add-ons but your child’s individual plans. These are provided for a set term, although they can be renewed once the term expires without any medical examinations or evidence. However, you can convert these policies to permanent or whole life policies before they expire.
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Whole life or universal life insurance policy
Whole life insurances are totally individual policies covering the whole life of your children. Although the premiums with these policies are comparatively much higher, they pay out without considering when the insurance holder passes away.
Why does the Child Plan make a smart choice?
The Child Plan makes an excellent Whole Life Policy for those who want whole life insurance for enhanced benefits. However, some essential benefits of the Child Plan are as under:
- You can open a Child Plan for your child when they turn 14 days older.
- There’s no upper limit on contribution, i.e., you can contribute as much as you want.
- You can contribute even if your child is over 18 years of age.
- The Child Plan is fully paid after 20 years.
- The beneficiary, i.e., your child, will get a tax-free annual dividend which they can use for any purpose, including education.
- You can transfer the ownership of funds to your child anytime after they turn 18.
- Your child can use the amount to fund any financial need such as post-secondary education, business startup, payment of the first house, etc.
Moreover, the Child Plan presents a perfect blend of characteristics of an insurance plan and a dedicated savings plan.
The pros and cons of life insurance for children
Pros:
- Permanent life insurance plans for children often include savings plans. With these policies, you can see the fund growing with interests tax-free over time.
- Life insurance plans for children, especially the Term Riders and Renewable Coverages, come relatively cheaper. They are cost-effective while covering all of your children in one single plan.
- The fund is not limited to a permanent insurance plan, as it protects your child’s entire life.
- These policies can guarantee coverage for your children’s future and serve as an emergency fund.
Cons:
- Although permanent insurance plans include savings plans, you don’t get any significant amount at the end of the day.
- With a term insurance plan, the fund is limited to about $35,000 per child.
- Although these plans are cheap, the benefits are limited.
Endnote
Life is quite unpredictable, and life insurance is quite reasonable. Having life insurance coverage for your newborn baby can be a proactive move.
However, having a life insurance plan can help you with future medical expenses if your child is sick. As for the positive aspects of life insurance for children, certain significant costs of such policies can speak for that. Children’s life insurance is a cheaper addition to your insurance plan. And with something like the Child Plan, you can rest assured about your children’s financial future. But the decision is yours.