Investing in life insurance for your child can offer enduring coverage, ensuring death benefit protection that extends into their adulthood. This enables them to safeguard their future family’s financial security.
Building a Financial Foundation
A life insurance plan for your child can grow in cash value as years pass, providing a financial resource they can tap into for significant expenses like a house down payment, educational fees, launching a venture, or even enhancing retirement income when the need for insurance lessens.
Benefiting from Tax Incentives
The policy’s accruing cash value enjoys tax-deferred status under current regulations, making withdrawals generally tax-exempt. Moreover, the death benefit payouts to beneficiaries are tax-free.
Advantage of Fixed Premiums
Life insurance costs typically rise with age, but securing a policy for your child early on fixes the premium rate based on their young age, affording them exceptionally low rates throughout their life.
Ensuring Insurability for the Future
Once the policy is active, continuous coverage is guaranteed provided the premiums are duly paid. With the inclusion of a Policy Purchase Option (PPO) Rider, your child is entitled to expand their coverage on specific future dates without the need to prove insurability, though some restrictions may apply.
Understanding Child Life Insurance
Child life insurance, essentially whole life coverage tailored for the young, mirrors the benefits of standard whole life insurance but at a reduced premium cost. Typically, an adult, such as a parent or guardian, holds the policy until the child reaches legal adulthood.
Policy Ownership Transition
When the child attains legal adulthood, the policy’s ownership can be transferred to them, allowing them to designate their preferred beneficiary, whereas before this transition, the beneficiary is usually a parent or guardian.
Flexible Ways to Fund Premiums
You have the option to contribute financially to your child or grandchild, enabling them to secure a single-premium life insurance policy that matches the gifted amount and requires no additional premiums. Alternatively, you may select a policy and manage the premium payments on the child’s behalf according to the payment schedule.
