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What Is Child Life Insurance?

Life Insurance

The mere thought of losing a child is enough to make any parent feel queasy. Child life insurance is a form of insurance that will pay out should your child become seriously ill and/or die. It can give you financial assistance during the most stressful time.

Why do you need child life insurance?

If your child becomes ill or passes away then there is a chance that you'd need to spend a significant time away from work. Insurance can help to keep your home functioning with mundane things such as mortgage repayments and bills while you're incapable of earning money.

Can I add kids to my life insurance policy?

It’s rare to get a life insurance policy solely for a child. It’s more common that you’ll add on a child to your policy. This makes it much easier to control and is known as rider insurance where you often have the option of adding critical illness cover.

Another way of insuring for the loss of a child is with term life insurance. This is where you’ll pay into the policy for a set period of time until they reach adulthood. This often means a cheaper premium as the policy will expire once the term ends.

Another option is to get a life insurance policy for your child throughout their life. While this can often give you a higher payout, the premiums are usually a lot more expensive which makes it rarer than the other options.

Choosing the right cover to insure my children

You should never dive headfirst into any insurance policy as firstly you need to consider what is going to be right for your needs. With child life insurance, this includes asking yourself some critical questions.

The first question is knowing who should be covered. Are you planning to have a joint policy and attaching a child to it or perhaps going for a sole policy. Also, you may not want to insure all your children and perhaps just the one that has a medical condition, for example.

You can also choose what type of payout you’re looking for and you’ll get a premium to match that. It may also be that you don’t want the cover for a certain period of time, such as 10 years. It’s important to look at your situation and choose a level of cover that works for you and your family.

Check the limits of the policy

All policies will be slightly different and have their terms and conditions on various aspects. One such limit may be how much you can claim for on the policy. This can often be capped at a certain level and will be linked in with the monthly cost of your premiums.

Policies will also have age limits with an example being policies only available for children 18 and under. The most important conditions, however, may be what constitute as a critical illness. If your child has a condition then you need to be covered for that should something happen.

The cost of your cover is going to depend on a wide number of factors and their medical history will be taken into account. Honesty is the best policy with life insurance as any withheld information (such as a preexisting condition) could invalidate the policy. Other factors that will affect the cost will be standard questions such as their age, the type of cover and the term.

What is family life insurance?

Insurance policies can sound the same but are completely different. Family life insurance is a standard form of insurance that pays out if a parent passes away. It doesn’t pay out if a child passes away until you specifically ask for a child life insurance element.

Can I insure my kids with a trust?

If you’re looking to leave money behind for your children then it’s going to be a different process. This can be mostly covered by regular insurance as you can leave it to a specified beneficiary. If you wanted to protect your children’s future then you can set up a trust. This is where the money will be held until they reach a certain age.

Protecting the future

Whether you are looking to cover the loss of a child, protect against critical illness or give them financial security after you’re gone, there’s a policy out there for everyone. If you specifically want child life insurance then look for that cover and don’t get it mixed up with any other type.

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