Life insurance for children
Life insurance for children is a sensitive topic. No one wants to think about the harsh possibility of ever losing a loved one, never mind a minor. There’s also the debate that life cover was introduced with the intent to cover the loss of income from a working adult – which, in this instance, is not the case. But before you brush off the idea of taking out cover for the life of a child, you might be interested in how such a policy could be beneficial to your family and we suggest you do a , at the very least.
In situations where the worst were to happen, there is always a concern of the ability to pay for a funeral and end-of-life expenses. As adults, we take out life insurance or funeral policies to take care of these costs and to ensure that our families are left with financial aid to help them through any difficult times. While some may have an adequate amount of money kept in an emergency fund to cover the passing of a child, other families may not have immediate access to the necessary funds. Sometimes, this leads to debt.
If you are not good at saving money, then paying monthly premiums towards cheap life insurance policies can be a relatively inexpensive way to set funds aside in case an unfortunate event does ever arise.
In This Guide:
- What do life insurance policies for children cover?
- Life insurance approval for children
- Whole vs. term life insurance
- Other benefits of life insurance for children
- Remember to ask questions
What do life insurance policies for children cover?
While policy schedules can differ between providers and the plan type you prefer, most for children in South Africa will cover the following:
Losing a child is devastating and it’s during this difficult period of mourning that parents do not want to be burdened with the thought of where the money will come from to cover the funeral and burial expenses. The premiums paid towards a life insurance policy for a minor build value over time and is paid out when a child unexpectedly passes away. Depending on your plan, the costs of the church service, the burial type, and other administrative matters will be covered by the policy.
When a child passes away, the parents are often left with medical bills that have piled up. These bills can relate to illness or emergency care in the case of an accident. The sum that is paid out to the parents can be used to cover all financial obligations, including the bills incurred by hospital stays, ambulance hire, and medical treatment.
When a child passes, the family members often need to seek counselling to help get them through the very difficult time. When the life policy pays out, it can be used to fund these sessions for the entire family. This little bit of consolation can be helpful - especially when it would be considered an impossible added expense for families who do not have access to sufficient funds at the time.
Life insurance approval for children
Life insurance for children can be a great solution to lifelong cover. There are many conditions that can present themselves during childhood. Diabetes, congenital conditions, and other life-threatening or lifelong illnesses may be excluded from insurance policies. This means that any claim that is related to the condition would not be paid out. Some insurers will withhold cover altogether if you have already been diagnosed.
If you have taken a life insurance policy out for your child when he or she is still young, then you will realise that one of the main benefits of having such a policy in place is that your child will always be covered no matter what type of illnesses they might get in the future.
* Please note that not all insurance companies offer this type of assured future cover and it is always important to .
Whole vs. term life insurance
As with life insurance policies for adults, there are two types of life insurance which also apply to children, namely whole and term.
Term life insurance is less expensive than whole life insurance but once you stop making payments, you can no longer make a claim.
Whole life insurance costs more but that is because it also works similar to an investment account. The funds that are in a whole life insurance plan can be cashed out with added interest at any time. This means that by the time your child turns 18, your insurance plan will have evolved into a little nest egg. The young adults can now use the money to purchase a car or pay for college.
Other benefits of life insurance for children
When deciding on whether you should buy life insurance for your children depends on many factors. Here we take a look at the benefits of securing a life insurance policy for kids:
- You Will Have Peace of Mind
As parents, we all want to outlive our kids. If the unthinkable were to happen to your child, however, then with a life policy in place for them - you would have one less thing to worry about. All of the expenses around their passing would be paid for without the stress and concern of where the money is going to come from.
- There Are Cheap Life Insurance Policies
Because you will be buying life insurance for a child, you will be looking at very small monthly premiums. Remember, it’s only the expenses of the child’s passing that need to be covered and there is no need to cover the loss of an income. You can even find comprehensive life insurance policies for your child for as little as R100 per month. For many families, the affordable cost justifies the purchase.
Remember to ask questions
Policies can vary greatly from company to company so remember to ask a lot of questions. Examples of questions to ask are:
- What type of cover is being offered (whole or term)?
- What will the monthly premiums be and what will the claim total be?
- How long will a claim take to pay out?
- Will the policy expire once a child turns 18?
- Will a child automatically qualify for full life insurance coverage once they have turned 18 (despite any diagnoses made during childhood).
While the decision on whether to insure your child is often clouded by an emotional thought process, it’s still a very important subject to consider. By weighing the pros and cons, you can make an informed choice on whether it is the right investment for your family. We also urge you to shop around and so that you get the right type of plan with the best quote.