As a parent, perhaps you have never thought about purchasing life insurance for your child. But a life insurance policy can provide peace of mind. Consider the benefits of a life policy for your child or grandchild:
Lower premiums as an adult
Monthly payments for life insurance policies are based on the health and age of the person when they took out the policy. If you purchase a life insurance policy when your child is young and healthy, their premiums may be significantly lower.
As long as you keep paying those premiums, your child can keep that same policy into adulthood and eventually take over the policy payments. But talk to your insurance professional or benefits adviser about any limits that could apply to that policy once they reach adulthood.
Coverage can help when financial troubles hit
Many people don’t realize that life insurance policies build cash value every time you pay a premium. This can be helpful in these three different scenarios:
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If you face financial difficulties while your child is young, you can borrow against the cash value of their life insurance policy. As long as you have kept up with the premiums, you can get a loan with an interest rate around 8%.
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If you experience the tragedy of losing your child and can’t return to work for several months due to grief, you may be eligible for bereavement leave through your employer. However, this time probably won’t be paid. A life insurance policy can give you three to six months of income, depending on the amount of the policy.
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When your child turns 21, they have the option to keep their life insurance plan or take the cash value instead. If your child has access to another life insurance policy with similarly low premiums, a cashout can be a nice nest egg to get them started on their adult life.
When deciding whether to purchase a life insurance policy for your child, you must balance the potential benefits with the risks of not having a policy in place. The right choice is different for every family.
If you can afford the low premiums every month, a whole life insurance policy may be the right choice for you and your child. Talk to Lee Scroggins, insurance professional, about the best option for you.
Choosing the right insurance agent is one of the most important decisions you will make. The Turner Agency, Inc. is a local Trusted Choice® independent insurance agency headquartered in Greenville, South Carolina. Serving the Upstate of South Carolina and beyond since 1962, we offer a variety of business and personal coverage choices and can customize an insurance plan to meet your specialized needs.
The information in this article was obtained from various sources and is not all inclusive regarding the subject matter. This content is offered for educational purposes only.
