Life Insurance For Children

Chris Redfern

credfern@orrinsurance.net

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Life Insurance is very important for parents… but what about children? Although the thought of losing a child is not one anyone wants to think about, it is a reality for many parents across Canada every year. So why buy life insurance for your child?
Getting life coverage on your children can help with funeral costs, as well as replace your income if you need to take time off work. But that’s not the only reason – establishing your child’s insurability is another big reason. This is very important because your child could become uninsurable at any point in their young life.
Purchasing life insurance coverage on them now may help them with their own life insurance needs down the road and ensures that if they become uninsurable in the coming years they at least have some coverage. There are also policies that can build cash value that can be transferred to the child down the road.

What types of life policies can you get for children?

In short – any of them. All life insurance on children requires health questions. See below for a list of the types of policies you can purchase on your children:

Permanent Life Insurance on Children
There are a few types of permanent insurance you can purchase on children:
– Universal Life Insurance: This is a permanent life insurance policy that does not renew or go up in price, and can potentially build a cash value. If you decide to put extra money into the life policy, it can build a cash value which your child can cash out later in life.
– Whole Life Insurance: Whole Life is the most popular type of permanent life insurance purchased for children. This type of policy builds a cash value based on dividends from the insurer – so no need to put extra money into the policy.
– Term-to-100 Life Insurance: Term-to-100, or T-100 life insurance does not renew or go up in price, and builds a guaranteed cash value typically starting in year 10.

Term Insurance on Children
There are a few options when looking at the less expensive “Term” life insurance for children (must be 16 years old):
– 10, 20, 30-year Term Life Insurance: Term insurance can be purchased on any children 16 years or older. Term insurance stays the same price for the duration of the term and renews at the end of the term, and can be converted to permanent insurance.
– Child Rider: If you (as the parent) have a life insurance policy in force, or are going to purchase one, you may be able to add your child(ren) onto your policy for a small amount of life insurance as a “Rider” on your life policy. This is the least expensive option.
Child riders do expire, and depending on what insurer you go through, child riders typically expire at age 25. The child should be able to convert their child rider into their own life policy without health questions.