Last time, I shared my speech about teaching children the value of receiving life insurance. Now, let's look at the process of getting life insurance for children.
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The application process is trouble-free for the child. If old enough, he or she signs the application; if not, no signature is required.
A medical exam is not needed.
The parent or other adult family member pays the premium, and then at some point hands over that responsibility when the child matures. It's that easy.
Generally speaking, the amount of insurance on the child can not exceed the amount of insurance already in force on one parent.
While adults will chose between term insurance and permanent insurance depending on their need, whole life insurance is the preferred choice for children. This is because - in addition to the low guaranteed premium, locked in for life - whole life provides a guaranteed cash value, a non-guaranteed cash accumulation, and the option to increase the survivor benefit if desired.
As a matter of fact, with a strong company that can pay dividends on a regular basis, the non-guaranteed cash accumulation can be very significant over time. The life insurance policy can become a valuable source of cash for the child later in life. The down payment for a mortgage, a business loan, or funds for an emergency can all come from the life insurance.
If the premium payer would like to spend less on the premium - and get a smaller cash build-up - then universal life could be used. With the life-long guarantees now available in these products, the premium could still be guaranteed to never increase, and the face amount could also be guaranteed to never decrease. And, the premium payment schedule could be made flexible, tailored to cash flow.
Copyright © 2001-2008 by Steven H. Kobrin, LUTCF. All rights reserved.
Steven H. Kobrin, LUTCF, is an independent life insurance broker and recognized expert in the field, serving as a preferred life insurance quote provider for many professional advisors and their clients, including attorneys, accountants, financial planners, and loan officers.
Experienced at patiently helping people through the life insurance maze, Steve is glad to share his perspective with the public and he warmly welcomes all emails and phone calls from consumers and consumer advocates.