Most parents of children flinch when the topic of life insurance for the kid is approached. But statistics prove that children do die unexpectedly whether it’s the result of an accident or an illness. Most insurance professionals will admit that approaching the subject of purchasing insurance on children is difficult unless you discuss the benefits to the children rather than talk about the cost of a funeral for their toddler or teenager.
Instead of blurting out the mortality rates for children, certainly, the parent would be more approachable if begin the discussion about how you can get started early in establishing a very affordable insurance policy that includes a cash value account that will be available for years to come.
5 Reasons to Buy Permanent Life Insurance for Dependent or a Child
When you think about, there is really no reason why you shouldn’t buy insurance on your dependent children, only really great reasons why you should.
- When the children are young and healthy, you are purchasing a lifetime policy at the lowest rate possible.
- You establishing the children’s insurability instead of risking that may come down with a chronic illness.
- The life insurance policies you purchase for your children can be set up to be paid off in twenty years which provides them with lifetime coverage and no premiums to worry about.
- As the child’s parent or guardian, you remain in control of the insurance policy until such time you feel it’s appropriate to transfer the ownership to your dependent.
- You are creating a cash value account that over time will be available for financial emergencies, an automobile purchase, partial funding for college.
You see, when you purchase life insurance on your dependent children, you are taking advantage of the five items listed above as well as having life insurance to pay final expenses in the event that the worst even actually happens.
What is the Cost of Life Insurance for Dependents?
Cost doesn’t always raise its ugly head but if you are concerned about buying several life insurance policies on your children, the rates are extremely affordable. Let’s take a look at some actual rates so we can diffuse this objection from the get-go.
Let’s consider purchasing a $25,000 whole life policy on a six-year-old male in good health. The typical rates you can expect to pay for 20 years would look like this:
|Face Amount||Monthly Premium||Annual Premium||20 YR Premium|
Notice that the monthly premium is very manageable and that you could easily insurance three children for less than $100 per month. The most important point to focus on is the amount paid over 20 years. At this point, your child will have this insurance the rest of his or her life with no payments required.
Why You Shouldn’t Wait to Buy Life Insurance for Your Children
This is always the third option in a sales presentation: Yes – No – Wait. Let’s run the numbers again when your six-year-old becomes 16-years old and has a drivers license. Everyone thinks about life insurance when their child starts driving.
|Face Amount||Monthly Premium||Annual Premium||20 YR Premium|
See what happens when you wait? You’ll end up paying about $2,800 for the life insurance, your child will be 36 when the policy is paid off instead of 26, and you’ve taken the chance that he or she may have developed diabetes or asthma during the 10 year self-imposed waiting period which will likely double the rates you would have paid. Again, let’s consider you have three children and the premium hit you’re taking for waiting is three times more.
What are the Best Life Insurance Companies for Dependents?
Who you purchase your life insurance from does make a difference. Even though there is a huge number of insurers that offer permanent life insurance for dependent children, there are a few that that stand out from the rest. Not just because their rates are more competitive, but also because they offer more options than the rest of the crowd, and options are a good thing.
Mutual of Omaha Life Insurance
Mutual of Omaha is one of those life insurance companies that practically everyone has heard of. Certainly, this is likely the result of decades of advertising, especially all the years they sponsored and advertise during the Wild Kingdom television show. Here’s a little history:
Mutual of Omaha’s History
Mutual of Omaha was founded in the early 1900s so over the next 100 years the company really learned to do things right. This privately owned insurance behemoth offers banking services, financial solutions, and insurance products to individuals and businesses across our nation.
Over time Mutual of Omaha has created competitive products that put the needs of their customers first and offer outstanding customer service to the policyholders and agents who represent them. A.M. Best Rating Services has awarded the company an
A+ (Superior) rating and estimates their financial size at $2 Billion or greater.
EASY START ® Children’s Whole Life Insurance Policy
- The EASY START® Children’s Whole Life Policy is perfect for establishing a permanent whole life insurance policy on a dependent child. The company offers the first three months of coverage for only $1 per month. On the fourth month, the policy owner will begin to pay the normal periodic premium.
- Available face amounts are $5,000 to $50,000. This death benefit selection allows the parent to choose a face amount that is likely to fit nicely within their budget. The death benefit is guaranteed for the life of the insured and can never be canceled except for non-payment of premium.
- Once the policy is issued, the monthly premium cannot be increased by the insurer for any reason. This means the rate for your young child will remain the same over their lifetime.
- Mutual of Omaha understands that as your child ages, they will likely need to increase their coverage, so they will allow the policy owner to increase the face amount without worrying about insurability.
- Like other permanent types of insurance, the EASY START® policy will build cash value over time because a portion of your premium is placed in a cash value account and earns a guaranteed minimum interest rate. The funds in cash account can be accessed through policy loans or the policy can be surrendered for the entire amount of the account.
Family Benefit Life Insurance
Family Benefit Life is another insurer who has shown remarkable success by remaining focused on their customers and each customer’s dreams. Their intended goal is to remove the financial uncertainty that most families regularly deal with and replace it with peace of mind.
Family Benefit Life, a 47-year-old life insurer is a subsidiary of First Trinity Financial Corporation. One of First Trinity’s first moves for Family Benefit Life was to increase their marketing area so more American families would have access to their valued products and services.
First Whole Life Insurance Product
Family Benefit’s First Whole Life product is an exceptional product to use for insuring dependent children. Since it is whole life insurance, the policy will include all the guarantees provided by whole life insurance.
- Guaranteed coverage for the lifetime of the insured as long as periodic premiums are paid.
- Once issued, the periodic premium cannot be changed by the insurer even if the insured comes down with a terminal illness or spends their life in a nursing home.
- The policy will build cash value over time which earns a minimum interest credit specified in the policy.
The First Whole Life Insurance policy comes with three payment options:
- Payment for life
- 10 pay (policy is paid in full after 10 years of payments)
- Single Pay (policy is paid in full with one payment)
The issue ages for First Whole Life are from 30 days to 80 years old and available face amounts range from $10,000 to $5,000,000.
The First Whole Life product also comes with optional benefits (riders) like Accidental Death Benefit, Waiver of Premium, and the Terminal Illness Rider.
Settlers Life Insurance Company
Settlers Life is another insurance company that provides affordable whole life insurance for dependent children. Since the policy is a whole life insurance product, the policyholder has all of the same guarantees that have been mentioned previously.
- Permanent coverage for life as long as payments are made
- A level periodic premium that cannot go up because of age or health issues
- Cash value is earned over time and credited with an interest rate that is set by the insurance company.
Settler Life is also a highly-rated carrier with A.M. Best awarding them an A- (Excellent) rating and lists their financial size between $250 million and $500 million. It’s also important to note that they’ve held this very high rating since 2013.
Settlers Whole Life Gold Plan
The Whole Life Gold Plan works particularly well for dependent children since the issue age starts at 15 days old.
The available face amounts range from $1,000 to $50,000 and every policy automatically includes an Accelerated Benefit Rider which allows the policy owner to get an advance on the death benefit if the insured is diagnosed with a terminal illness.
Settlers Whole Life Gold Plan is also available in the 10-pay format which means the parent or guardian can pay premiums for 10 years and then the policy is paid in full.
Spectrum Insurance Group is made up of professional life insurance agents who are licensed in all 50 states and the District of Columbia. As principal licensed life insurance agent Bennett Bier has helped 1000’s of people purchase life insurance online & over the phone. During his career he has become the go to expert for securing hard to place term and permanent life insurance policies for clients across the nation. With his wealth of knowledge of each life insurance carrier’s products and underwriting he provides honest answers and advice to every client. Bennett Bier and his team will work tirelessly to successfully secure the coverage your family deserves.
All content on this site has been written by life insurance experts & licensed life insurance agents.