Buy Childrens Whole Life Insurance

Children's whole life insurance policies, sometimes referred to as "juvenile" policies, are best purchased at the earliest age possible. Just like adult whole life insurance, the younger the applicant is at the age of issue, the more likely he or she is to pay a lower premium. And, purchasing a children's whole life policy prior to the development of childhood health issues such as asthma or juvenile diabetes will always result in a lower premium. If a child has developed a minor health condition such as an allergy, he or she will still more than likely qualify for children's whole life insurance but not at the lowest possible rates.

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Parents and grandparents who want to provide for the financial security of the child often choose a whole life policy soon after the child is born. Whole life insurance builds cash value over time. Further, the insurance company can only cancel the policy if premiums are not paid according to schedule.

The owner of a children's whole life policy is the adult who purchases it. If the owner lives in a different state than the child, the owner must purchase the policy in the state in which he or she lives, not the state in which the child lives. The adult then owns the policy until the child is considered of age, usually at 21. At that point, ownership transfers to the child. He or she will normally have to option of converting the policy to an adult policy or surrendering it for the cash value.

The Benefits of Children's Whole Life Insurance

While it's often a difficult topic to discuss, the death benefit that is paid on a children's whole life insurance policy is only one of the benefits. The death benefit should be large enough to cover final expenses including those associated with the funeral and burial, and any medical expenses that may have been incurred if the death was the result of an accident or extended illness.

Other benefits, which are far more positive, are guaranteed insurability in later life and a cash account that can be used to pay for college, graduate school or as the down payment on a first house.

Guaranteed insurability means that the child can convert the policy to an adult policy once he or she reaches a certain age without having to take a physical or provide answers to heath questions. Insurability in later life can be compared to getting an unsecured credit card: Credit card companies base an applicant's ability to pay based on his or her past ability to pay. Likewise, the price paid for life insurance in the future is based on whether the applicant was insured in the past.

A children's whole life policy can be "annuitized" at some point in the future in order to take advantage of the cash value. One of the most common reasons for surrendering a whole life policy is to pay for college. However, before surrendering any children's life insurance policy, the insured and the owner are advised to seek the advice of a reputable tax advisor. While most insurance policies enjoy favored tax status on both a federal and state level, there can be instances when alternate methods of funding a college education would be preferred.

Children's Whole Life Insurance Compared to Term Life Insurance

Whole life insurance for children is permanent insurance. Most policies cover children through the age of 21. Once coverage on a permanent insurance begins, only the insured, or the owner, can cancel coverage. Whole life insurance for children is most often purchased as an investment to provide a financial advantage later in life.

Term life insurance is in force temporarily and does not build cash value. Once the term has ended, the insurance coverage ends, and there is not a cash account that can be drawn on. Term life insurance for children is most often used strictly to pay for funeral and burial expenses. It is not purchased as an investment to provide for a college education or any other type of investment that requires the payment of a large lump-sum amount.

Children's Whole Life Insurance Companies

One of the most well-known issuers of children's whole life insurance is Gerber. Gerber offers several whole life policies for children. Most are available to children between the ages of 14 days old and 14 years old. Plans include the Grow-Up Plan, which provides whole life insurance up to $50,000, low premiums that do not increase and a benefit that doubles at age 18. The Gerber Whole Life Plan provides permanent whole life coverage in benefit amounts between $25,000 and $150,000. This plan includes an optional "Waiver of Premium" rider that allows the payer – usually a parent or grandparent – to discontinue premium payments if he or she becomes totally disabled before the age of 60.

Mutual of Omaha offers a children's whole life insurance policy that begins around $1 per day. Children as young as 14 days old are eligible and coverage can remain in effect until he or she reaches the age of 25. Coverage amounts are as high as $30,000 and the low premium rates that begin in childhood will not increase. Later in life, the child has the option of converting the policy to an adult whole life policy with a guarantee of up to $150,00 of coverage. The cash value of the whole life policy continues to grow as long as the policy remains in force.

Other life insurance companies that offer whole life insurance policies for children are Globe, Metropolitan Life and New York Life. It's always best to review the policies of several companies before purchasing a children's whole life insurance plan. Life insurance companies offer very competitive rates on children's insurance because of the possibility of gaining a life-long customer. The key features of any children's life insurance policy should be fixed premiums, guaranteed insurability at a later date and the option to use the cash account for any reason.

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