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Life insurance for kids – should you get coverage?

By September 1, 2018 Personal Insurance
Life insurance for kids - should you get coverage?

Some people think life insurance for minors is unnecessary because the basic reason for life insurance is to replace income that would be lost due to the death of a breadwinner. Since a child usually has no income, there’s no need to have it, right? Actually, that’s wrong. There are many reasons why purchasing a life insurance policy for a child could be a good idea. Here are six of them.

Reason # 1: Time to Grieve Without Having to Worry About Funeral Planning or How to Pay for the Process

There may be nothing more devastating than the loss of a child. In a time of great sorrow, the added stress of having to prepare and pay for a funeral, while at the same time continuing to provide and care for your family can be overwhelming. When it comes to work, some people are able to return to work right away and function as usual, while others may suffer from severe depression and be unable to work for a period of time. Also, if you took out any loans for your child, such as a college loan, the debt doesn’t go away if there is a death. Having a life insurance policy in place can help ease the stress of the financial concerns that do occur when there is a loss.

Reason# 2: Funerals Are Expensive

There’s a misconception that a child’s funeral is inexpensive, and that most people probably have the money on hand to pay for one. According to 2017 data from the National Funeral Directors Association, the average cost of a traditional funeral (including use of facilities, embalming, metal casket, etc.) is $8,755! And, the average cost for a cremation is not far behind (with viewing and funeral) at $6,260!

Reason #3: The Rate is Locked In

If you purchase life insurance for your kids, you will lock in the rate for the life of the policy, meaning the premium will never change. Generally, the younger a healthy person is, the lower the premium, due to life expectancy and other factors.

Reason # 4: Future Insurability

A permanent life insurance policy locks in the future insurability of the insured person. Simply put, this means that the original price you are quoted and pay at the start of your insurance coverage remains the same throughout.

So if you decide to hold off purchasing life insurance until your child is an adult, their premiums will be higher and there’s a chance they may be uninsurable, as other factors (such as age, medical conditions and drug, alcohol or tobacco use) come into play.   

Reason # 5: Cash Value and Living Benefits

Permanent life insurance combines a death benefit with a savings portion, allowing the policy to build a cash value that can be withdrawn or borrowed against. The policy owner can use this money to help their child pay for things like college tuition and expenses, a vehicle, medical expenses or for a wedding. 

Reason # 6: Collateral

A permanent policy can be used for collateral. As kids become adults, they may need a loan for a home, vehicle, college or to start a business, but because they are just starting out in life, there’s a good chance they won’t have much to offer as collateral. They can borrow against the cash value of a permanent life insurance policy, which may eliminate the need for a cosigner, or for them to borrow from you.

If you have any questions about life insurance for children, or if you’d like to learn more about life insurance options in the Lehigh Valley, please contact us. We can help ensure that you have the insurance coverage you really need.


Arbor Insurance Group provides life insurance, home insurance, auto insurance, and other personal insurance products throughout the Lehigh Valley, including Allentown, Bethlehem, Easton, Emmaus, Macungie and surrounding areas.