The idea of insuring a healthy child can seem excessive and even anxiety-inducing, but although the loss of a child is rare, purchasing a juvenile policy can lead to some lesser-known benefits that will protect your child financially as they grow into an adult. Let’s look at both juvenile permanent life insurance and juvenile term life insurance to assess the potential benefits for you and your child:
Juvenile Permanent Life Insurance
Purchasing a permanent life insurance policy for your child means that you will pay the lowest rates available until you can transition ownership of the policy to your child when they turn 18, at which point they can continue paying the same low rates. This way, your child will have a guaranteed inexpensive rate and continued coverage as they age. It is also important to consider the cash value of these policies—the cash value is tax-deferred, and therefore can be used as another way to accumulate savings. If an unexpected expense comes up and cash is needed, the policyholder can access the cash value through policy loans or withdrawals.
Juvenile Term Life Insurance
This kind of policy offers less expensive coverage, and lasts for a specific length of time (usually between 10 and 30 years, depending how old the child is when the policy is purchased). Premiums remain level during the length of the term, but when the term expires, coverage becomes more expensive. Usually, juvenile term coverage is offered as a rider on a parent’s term policy. Once the child reaches adulthood, the rider expires, and the now-grown child will become responsible for purchasing their own policy.
Although most children are healthy, an unexpected illness or other health concern could make them more difficult—and expensive—to insure in the future. By purchasing a juvenile policy, you are essentially locking in the lowest rates for your child, or at the very least, protecting them against the unexpected until they can purchase a life insurance policy of their own.
