3 Reasons to Consider Life Insurance for Your Child

Life insurance coverage is a smart way to prepare for the financial distress that may occur after you or a loved one passes away. You may understand why this coverage is important for yourself, your spouse, and even your parents, but life insurance is also good to have for your children. Here are a few reasons why you should secure life insurance coverage for your children.

Again, nobody wants to think about the loss of a loved one, especially the loss of their child, but it does happen. This loss will cause a great deal of emotional distress, but it can also cause financial distress if you are not prepared.

On average, traditional funeral services can cost between $8,000 and $10,000, and most people do not have these excess funds available. In addition, you may have other expenses such as hospital or medical bills that can be challenging to pay.

The right death benefit, paid to you when your child passes away, will cover these unpleasant expenses.

Many factors influence the cost of a life insurance premium. If a person is ill or has declining health, for instance, their life insurance premiums will be more expensive. Also, if a person's job or hobby are considered risky, insurance companies will charge them higher premiums.

However, age is the most important factor that influences the cost of life insurance premiums.

A younger person is at less of a risk of dying, so life insurance companies feel younger policyholders will make more premium payments before a death benefit has to be paid. Therefore, the younger you are, the lower the risk and the lower your premium payments will be.

If you want the most affordable premiums possible, purchase life insurance for your child as early as possible. 

All life insurance policies are not created equal, so it is smart to know your options.

Term life, for instance, offers coverage for a specific term, which is usually 10, 20, or 30 years. At the end of the term, you have the option to renew for a new term or convert to a whole life policy. One of the benefits of term life insurance is that your premium is usually lower the younger you are but will increase with each renewed term.

Whole life policies offer coverage for your whole life. The premiums do not change over the period of your life. Whole life policies also have an investment benefit too.

Whole life policies accumulate cash value at a guaranteed rate over the life of the policy. Since your child is young, they will accumulate a larger amount of cash value throughout their life compared to an individual with a whole life policy who is older.

The cash value does not necessarily have to be paid out with the death benefit only, though. Cash value is also a living benefit, which means you or your child will have the option to cash out some of the value, interest, or dividends earned on the policy. This money can be used for a variety of things, including to pay for medical expenses or even partial college tuition.

Term and whole life insurance each have unique benefits to consider before choosing a policy.

Life insurance is an investment for not only peace of mind but also protection against future financial stresses. For more information on life insurance for yourself or your child, contact Illinois Insurance Center today.