Articles | Understanding Child Life Insurance

The child life insurance coverage is a permanent life insurance type that functions to protect minors. It protects families against any unexpected and sudden expenses involved in a child's funeral. The insurance also secures an inexpensive coverage guaranteed for the recipient in his lifetime.

This insurance type also offers a guaranteed cash value growth complete with a "collapsing the policy" feature. Insurance carriers during their early twenties will find this helpful. Such policy type presents the owners an alternative to purchase or obtain an additional guaranteed insurance in some cases whenever the child has already reached maturity.
- Typically, a child life insurance policy can be summed up with the following:
- Issued with a face value starting from $5,000 to about $50,000
- No required medical examination

It has a zero investment scheme and a zero interest risk in cash value growth considerations

It provides insurance coverage for any designated beneficiary.

This insurance policy type is distinct from another type called the Juvenile Life Insurance (issued with an accompanying much larger face value, normally from a hundred thousand to about ten million dollars) since this is basically designed for college savings, guaranteed insurability, estate planning or lifetime savings purposes.

When it comes to underwriting, children under 18 qualify for the "Standard" underwriting class. The reason behind is that children do not usually have a history of medical problems to begin with for underwriters to evaluate.

The permanent insurance concept is best suited for young children. The policy can be owned by either the parent, the grandparent or anybody significant in children's lives. Such policy type is also capable of accumulating cash values; portions of the paid premium can be set aside using a separate account accessible only by the policy owner. Whenever the recipient reaches 18, it can then be transferred to the parents' name and they will be entitled for control of the policy as long as they deem necessary.

There are also cases when parents are able to attach their children (considered as riders) in their own insurance policies. The costs of the rider policy system may only be minimal, but the amount generated from the death benefit is significantly less from what the owner of the policy will get.

Another feasible option is the term policy. This covers a specified number of years (1, 10, 20, or 30 years), with the premium and the death benefit remaining level throughout the policy term. Unlike the permanent insurance type, parents cannot expect cash accumulation in this setup.

Although parents do not like the idea of dealing about the death of their children, the death benefits provided by the child life insurance can be readily used to pay for burial expenses. It can also be used to prepare their child so they can avail good insurance coverage when they grow up to become adults. Everyone is well aware of how life insurance can protect individuals in the society. It had, and will continue to help families cope through the difficult emotional times ahead. The same will be accomplished with the insurance coverage you will give to your child.