Burial Life Insurance for Children is affordable, but should you buy it?
The idea of Burial Life Insurance For Children is just as difficult to write about as it is for some of us to read. It has been said that no parent should outlive their children. No Parent should have to bury their child. No parent should have to endure the pain and distress of seeing your baby die. You are best to make a plan, self funded or through burial life insurance for children, to deal with this unlikely event.
First, insurance is for the living. If your child dies, you should be prepared to pay for:
- Enough benefit to cover their burial expenses. If there is any additional money beyond the funeral cost you have options.
- Pay for medical expenses and transportation costs.
- Bereavement: This is an unknown costs. It took some time for my parent to get rerooted and establish a new normal. I share some of the story in Best Life Insurance Options for Children. Bereavement can take weeks or months away from your work. You are best to plan for a brief loss of income.
- Donate any remaining benefit. It has been declared that no one should profit from the death of a child. If you find yourself in this position, you can find closure and meaning in a donation to a charity, church, organization or create a scholarship. These are powerful way to memorialize your child’s life.
What is Burial Life Insurance for Children Exactly?
Burial Life Insurance for Children is an individual life insurance policy for your child and can be a permanent or term policy. I understand Burial Life Insurance for Children as a policy that is purchased with one goal in mind. That goal is to provide funding for burial expenses which the industry suggest is $10,000. You may want to plan for more given the reasons noted above, but any less might be a mistake.
Just like Life insurance for adults, there are two general types of policies for children. Term and Permanent. Term does not build up cash value and is much more affordable. Permanent can build up cash value and do lots of other stuff (stuff: an unofficial term used by insurance agents experienced in selling sand at the beach).
A child rider is touted as the best way to purchase life insurance for kids. There is some truth to that notion, but it is not a one size fits all solution. Regardless, It is a solid solution for for burial life insurance for children. A Child Rider cost about $60 annually for $10,000 in coverage and will cover multiple children in the household without an increase in cost. Yet, it is not the lowest cost solution for families with one child. The more children you have, the more competitive a child rider becomes.
Term Life Insurance for kids
Term life insurance has been championed for being a low cost solution for adults. The policy designed for kids is not much different. Term Life Insurance for kids is a stand alone policy unlike the child rider. Interestingly, there has been little written about term life insurance for kids and fewer policies offered by major insurance companies that offer term for adults. The majority of companies do not offer term policies unless the insured is older than age 18.
I have found there to be two types of Term Life insurance policies for kids; the difference is how you pay. The first is your typical pay as you go. Just like term for adults, you payments are scheduled monthly, annually or somewhere in between.
The second type is called Single Premium Term. In my search for Best Life insurance for Children I found a single payment option which is very nifty! The idea is simple, you pay a lump sum upfront to pay for the term coverage. Three words i must interject: quick, easy, done. For example, purchasing term coverage on a 1 year old to age 18 for a lump sum cost of $295. This single payment of $295 provides you with $10,000 in coverage till age 22. You get the most value if you purchase while your child is young.
Permanent Life Insurance for kids
When looking at a Burial Life insurance for children solutions using permanent life insurance you have several costly options. Remember, the idea of permanent life insurance is meant to cover the cost of burial regardless of what age your child passes. Therefor, the cost will be much more and possibly ongoing. Permanent life insurance means insurance that lasts for the life of the insured and so does the payment in most cases. The policy pays upon death of the insured child regardless of age as long as payments are made.
Beyond Burial Life Insurance for children, permanent life insurance on a minor has tax advantage savings options. If you find value in creating a strategy beyond burial life insurance for children, then you are best to compare and contrast the other tax advantaged saving options like 529 college savings, IRAs, and Annuities.
What are the benefits of Burial Life Insurance for Children with a savings option?
Beyond solving for the burial expenses, there are additional benefits that some argue are worth the extra cost. Many permanent policies can be overloaded to provide a more attractive cash value. This cash value can be used as a form of saving and a tax favored tool. In some cases, this savings can be excluded from resources used to determine income eligibility for education. Cash value in a life insurance policy does not need to be listed on a FAFSA form (Financial Aid for College) as it is not considered part of the formula for EFC (Expected Family Contributions).
A secondary benefit often touted is the unlikelihood that your child can develop a chronic or terminal disease and can not qualify for insurance as an adult. When a parent purchases a burial life insurance policy for children in the household, it is argued that they are keeping their future insurability in check, avoiding a possible denial of coverage. While this is very unlikely, if your family has significant medical history that is hereditary you may want to think twice. The need for securing future insurability might be worth your consideration.
When looking at Future Insurability, you have many options beyond a permanent life insurance policy. Most Term and Term riders offer convertibility for the child to their own policy. This conversion can be up to 5 times the amount of the coverage. Some Permanent life policies like the Gerber Grow Up Plan give you guaranteed increases. The increase options are at significant life events such as when the child becomes an adult and include marriage and birth of a child.
Case Study Example
Case in point, A close friend purchased Burial Life insurance for all her children a few year after her husband passed away. She made decent money working for the Federal Government and found peace of mind in making sure that this expense would be covered. Despite her kids being over the age of 40, she does not want to let go of these permanent policies. She continues to pay as she intended.
Many might argue that those damn kids need to handle their own responsibilities and they should purchase their own policies. I can agree with that argument. Yet, some of the children are no longer insurable due to illnesses. If you find yourself in this position, understand that the life insurance contract can be transferred as long as there is insurable interest. For example, mom can own the policy or transfer ownership, mom can keep ownership and have insured child become the payor of the policy. Equally, if you are the insured child you can be owner and payor and fully spread your wings away from the nest at age 40.
So, Should you Buy Burial Life Insurance for Children?
Whether you purchase insurance or choose to ride without coverage, you need to have a plan that solves for your personal confidence. Some will advocate great value in being self insured and having money saved aside for things like a death of a child. Other feel comfort with a solid solution which a burial life insurance policy can provide.
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Jose, Hoser, Joe from the show
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