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How to Choose a Life Insurance Policy for Your Child

Child Life Insurance – Mom playing with daughter outside

So you’re thinking about getting life insurance for your child or grandchild. That’s a great start! You’re on your way to making a smart choice for your family.

Let’s learn more about what you should keep in mind before you apply for a policy.

Types of Life Insurance Policies for Children: Term vs Whole Life

How to pick life insurance policies for children? Let’s start with a quick explanation of the two most common types of life insurance: Term life and Whole life.

Term life provides insurance protection for a set period of time, usually 10 to 30 years. At the end of the term, the policy expires, and you would have the choice of renewing or ending the coverage. If a parent has a Term life policy, some insurance providers offer the option of adding a child life insurance “rider” — an expanded protection — to that policy, for an additional fee.

Whole life provides insurance protection for the entire life of the person who’s insured, as long as monthly premiums continue to be paid. Whole life policies have the additional benefit of cash value, an amount that builds over time. As long as premiums continue to be paid, you could borrow against the cash value for unexpected expenses, or you could decide to receive the accumulated cash value if the policy is surrendered.1

Our Gerber Life Grow-Up® Plan is a whole life insurance policy for children that builds cash value and can last a lifetime.

Term Life Insurance Child Rider

Although Gerber Life does not offer this option, some insurance providers have adult life insurance policies with child “riders.” A child rider is an add-on to a parent’s term life policy that extends the coverage to their child. It’s marketed as a simple rider and less costly than getting a separate policy for your child, but you should be aware that when a parent’s policy term ends, your child's coverage ends as well.

Permanent & Whole Life Insurance Policies

The other option to insure your child is by purchasing a whole life insurance policy specifically for the child, like the Gerber Life Grow-Up® Plan. Unlike a child rider on a parent’s term life policy that expires at the end of a term, the coverage is permanent. As long as you keep making premium payments, the coverage will last a lifetime.

As your child gets older, they may need additional coverage. The Grow-Up® Plan addresses the increased need in two ways:

First, during age 18, your child’s coverage amount doubles automatically at no extra cost. So, a $20,000 policy becomes a $40,000 policy, and so on, at no additional cost.

Secondly, when your child turns 21, they become the policy owner and can take advantage of the Guaranteed Purchase Option Rider, up to ten times the original coverage amount, at our standard adult premium rates. There is no medical exam or health questionnaire required for the additional coverage.

As mentioned, whole life insurance policies also build cash value. Here’s how it works:

A small portion of your monthly premium payment is set aside by the insurance company and builds up over time as cash value. You could borrow against the available cash value to cover unexpected expenses. Or, if you or later your adult child decides to end the life insurance policy, you could collect the full accumulated cash value.

That benefit isn’t available with a term life policy — there’s typically no cash value during or at the end of the term.

Questions to ask about your child’s life insurance

What are the benefits of buying coverage today?

When you buy life insurance for children, the policy you buy today offers coverage for life at a childhood premium rate that never goes up, even when your child is an adult. Plus, the longer you own a whole life insurance policy, the more cash value it accumulates over time.

What happens when my child is an adult?

Until your child is 21 years old, you are the owner of the child life insurance policy and responsible for making premium payments.

Upon reaching adulthood at age 21, the policy ownership transfers to your child, who would have a few options:

  • Keep the policy by continuing to pay the locked-in childhood premium, to maintain the valuable life insurance protection.

  • Surrender the policy for the available cash value.

  • Have the option, as a Grow-Up® policyholder, to buy additional coverage should they want to, at our standard adult premium rates for their age at that time. Their acceptance is guaranteed, regardless of health or occupation or anything else.

No matter what they choose, getting a children’s whole life insurance policy while they’re young means they can have something of value when they turn 21.

What affects the price of life insurance? 

The cost of life insurance premiums is based on the coverage amount, the age and gender of the insured person, medical history, and if the person is a tobacco user.

Premiums Increase with Age

One of the biggest factors that affect the cost of life insurance is age. So, the sooner you get life insurance for your child, the smaller the locked-in lifetime monthly premium. Once you buy a policy, the rate never goes up for you or, afterward, for your adult child, as long as premiums are paid.

Life insurance is just one part of smart financial planning

There are good financial reasons for getting life insurance for your family. Remember that although you buy life insurance to protect your family against the unexpected, you still want to make sure you’re saving what you can for retirement and college, to truly help to better secure your family’s financial future.

Call us toll-free at 1-800-704-2180 to get your quote today — and take the first step toward securing the best coverage for your family.

1 Policy Loan interest rate is 8%. Loans may impact cash value and death benefit.

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