Typically, you can buy life insurance for a child who is age 17 or younger.
But what happens when you child or children turn 18 years of age? And what happens when they are self-supporting no longer dependent on their parents?
People with children are strongly recommended to have life insurance so that the needs of the child and remaining living spouse can be taken care of. Furthermore, the need to have a life insurance doesn’t actually end when your children grow up, as many may suggest. Keeping life insurance (either term insurance or whole life policy) is a good idea:
- to build a nest egg,
- to ensure coverage as an adult, or to provide for end-of-life expenses should the child die unexpectedly, or
- to provide for end-of-life expenses should the child die unexpectedly.
“There are many reasons parents with children might want to continue having life insurance after their dependent children become independent. Couples that have built a life together, for instance, should have life insurance in case one of them passes away so that the other can maintain the same quality of life without incurring a burden on their independent children,” said Juan Carlos “JC” Doitteau, President at Insurance Pro.
Parent Owners Can Transfer Ownership (if they decide to do so)
Although there are a few companies that offer products that do become the child’s asset at age 21, most policies bought on children do not automatically transfer ownership.
In the case of a child’s whole life insurance policy, however, when the adult child grows up and has a family of their own, this small whole life insurance policy purchased on them when they were young has accumulated cash value. These funds can be accessed through policy loans and withdrawal or surrenders.
Some benefits of buying children’s whole life insurance include:
- Locking in a low premium
- Guaranteeing life insurance coverage for the child no matter what health issues may occur
- Option to purchase more coverage later in the child’s life
- Accumulating cash value that grows with the child
Types of policies:
Whole Life Insurance
- Permanent coverage
- Accumulate “Cash Value” fly in cash.
- You can get money in life benefits if you suffer from a chronic, critical or terminal condition.
Term Life Insurance
- Coverage for a certain time. For example at 10, 15, 20, 25 or 30 years.
- You can get money in life benefits if you suffer from a chronic, critical or terminal condition.
- Once the policy expires, it can be renewed for another term or converted to permanent Insurance.
- Does not accumulate “Cash Value”
Read also: Frequently Asked Questions on Life Insurance.
Learn about this and other fringe benefits by contacting Insurance Pro experts.
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